Roland Benedikter

Roland Benedikter · Katja Siepmann Editors Chile in Transition Prospects and Challenges for Latin America’s Forerunner of Development With a Foreword by Ned Strong, Harvard University, and a Preface by Larry Birns, Council on Hemispheric A airs, Washington, D.C. Chile in Transition

Roland Benedikter • Katja Siepmann Editors

Chile in Transition Prospects and Challenges for Latin America’s Forerunner of Development

With a Foreword by Ned Strong, Harvard University, and a Preface by Larry Birns, Council on Hemispheric Affairs, Washington, D.C. Editors Roland Benedikter Katja Siepmann University of California Opina Market Research Institute Santa Barbara , CA , USA Santiago , Chile

This book is sustained by the Council on Hemispheric Affairs (COHA), an independent think-tank on Latin America and inter-American relations in Washington, D.C.

ISBN 978-3-319-17950-6 ISBN 978-3-319-17951-3 (eBook) DOI 10.1007/978-3-319-17951-3

Library of Congress Control Number: 2015937972

Springer Cham Heidelberg New York Dordrecht London © Springer International Publishing Switzerland 2015 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifi cally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfi lms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specifi c statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made.

Printed on acid-free paper

Springer International Publishing AG Switzerland is part of Springer Science+Business Media (www.springer.com) Critical Acclai m for This Book

Chile is a new member of the OECD since 2010 and a forerunner of development in Latin America. This book is one of the most encompassing and interdisciplinary country studies on Chile in many years, and this will be the standard text on the nation for the years to come. Sergio Arzeni , Director of the OECD Center for Entrepreneurship , Small and Medium- sized Enterprises and Local Development Chile in Transition is an interesting and comprehensive research that allows an insight into current politics, economics and the overall development of my country. This work is very well done, and I consider it as a really informative and valuable text, because it describes the nature of the upcoming challenges for Chile in a very precise way. Particularly remarkable are some comments on foreign policy as well as on natural resources and energy. This is a most welcome book. Mariano Fernández , Ambassador of Chile in Germany , Berlin A generation ago a group of economists designed one of the greatest experiments in modern history. Equipped with a blank cheque by dictator Augusto Pinochet, they converted Chile into a laboratory of neoliberal theory. What are the results of that experiment? In this lucid analysis, Roland Benedikter and Katja Siepmann investigate the Chilean laboratory and fi nd tracks in offi cial statistics and public discourses, but also in advertisements or in the Metro of Santiago. In this way they draw with great precision the lights and shadows of the Chilean model, which has been profoundly called into question for the fi rst time in three decades. Daniel Matamala , Anchorman CNN Prime , CNN Chile This study documents the main debates in current Chilean politics (i.e., education, indebtedness, corruption, lack of participation) in a refreshing way compared to other literature which in most cases concentrates in rather schematic ways on discussions about the dictatorship and economic development. In contrast, this book unfolds and addresses the most important questions of today’s Chile from a liberal viewpoint. In my view, this is the most solid work about Chile I have seen for years within the liberal perspective. Benedikter’s and Siepmann’s book is especially fortunate in its treatment of the economic and fi scal dimensions, where the question marks about the paradoxes between the macro and the

v vi Critical Acclaim for This Book

micro spheres are elaborated with solidity…The processing of Chilean unease (malestar ), which normally tends to be omitted in liberal literature on the nation, results very interesting… This book is a signiﬁ cant contribution to the analysis of contemporary Chile, and it incorporates the different debates on the nation in a multidimensional way. Prof. Dr. Alberto Mayol , Universidad de Santiago de Chile ( USACH ) This text is a brilliant analysis of the current and envisaged context of reforms and innovation in Chile. Given the outstanding ambition and multidimensionality of its transition, Chile will remain a most interesting topic to study throughout the coming years. This book decisively helps to understand the greater picture, and I recommend it with the utmost conviction.

Professor Dr. Andrea Billi , Università La Sapienza , Rome Benedikter and Siepmann offer a lively explanation of contemporary Chile’s reality, challenges, and prospects for the future. This is a timely, important, and eminently readable book. Amy Goodman , Host and Executive Producer , Democracy Now ! Abstract

The economic, cultural, political, and social situation of Chile, a forerunner of development in Latin America for decades, shows a nation in transition. After the re-election of the leader of the center-left coalition, Michelle Bachelet, to new–old president in November–December 2013 at the expense of the conservatives under Evelyn Matthei and former president Sebastián Piñera, some observers expect a broad “reboot” of the country. Others, though, remain sceptical that the government of Michelle Bachelet’s second term 2014–2018 (Bachelet II) will be able to implement the deep-reaching reforms it promised. Despite insecure prospects, there seems to be wide consensus among the political protagonists of the country—regardless of party affi liation—and among most international analysts that reforms are unavoidable in the medium term if the nation’s success story is to continue, and if Chile wants to keep its place within rapid international development. While the Andean nation is still seen by many as an example of progress in South America and—at least to a certain extent—of the potential for progress of the global South, it simultaneously faces a complex constellation. The question is how institutional, political, and social innovations can be incepted without interrupting what has been rightly seen by the international community as a remarkable success story throughout the recent decades. The answer to this question depends not only on economic and fi nancial issues, but in no small part also on the development of political culture, social psychology, and contextual politics, i.e., of identity questions between the polarizing narratives of “center-left” and “center-right.” This book provides an interdisciplinary overview over Chile’s current situation and analyzes the nation’s resulting main future trajectories. It points towards the achievements, opportunities, and potentials of the country, but also to its main challenges and tasks ahead—both to a certain extent exemplary for the greater regional context. The questions addressed are: What is Chile’s situation irrespective of media rep- resentations and ideological curtains, and beyond simplifi cations? What are the nation’s main opportunities and problems? And what strategies and policies will be concretely applicable to improve political and social balance, promote broader participation in decision-making processes, widen access to education, create wealth

vii viii Abstract for a greater number of people, decrease inequality, foster reconciliation between antagonist groups, and mitigate ideological divisions? Last but not least: Will other nations be confronted with tasks similar to those of today’s Chile? If yes, can they learn something from the Andean country’s case, or is the recent story of Chile unique and incomparable? And subsequently: Can Chile become a role model—and if yes, for whom, in what ﬁ elds, and to what extent?

Roland Benedikter Foreword by Ned Strong, Harvard University, David Rockefeller Center for Latin American Studies (DRCLAS)

Despite Chile’s impressive success story of the past decades, like most other Latin American countries the nation remains under-represented in the international analysis of contemporary world politics—in particular with regard to sociopolitical anticipation and if-then scenarios. This book, an in-depth picture written in a clear and accessible style, is a timely pioneer to attract more attention to a country that is an example of how economic progress, enduring sociocultural and mental habits—including the legacies of authoritarianism—and post-traditional complexity can go hand in hand. In the case of Chile, the present situation of transition is the result of a process begun in the 1990s to reform economic policies and political institutions, including a critical look at the nation’s constitution itself. This transition seeks to master social inequality broadening the access of larger sections of the population to the benefi ts of economic growth, to an educational system to be developed towards international quality, and to further improve Chile’s foreign relations by redefi ning its standing in the new, multipolar global order. Addressing all these crucial issues, Benedikter’s and Siepmann’s book is both an impressive didactic play on the long-term effects of globalized capitalism on a young democracy in our times; and a masterpiece of political analysis embedded in the framework of the efforts to further develop an already successful country. Most important, this work is an example of what a contemporary interdisciplinary “nation study” should look like by analyzing one of the most dynamic, yet enigmatic nations in the hemisphere. It provides a unique multidimensional analysis of Chile’s situation and the most important tasks ahead. This book contributes signifi cantly to a balanced international discourse on Chile, and I recommend it with the utmost conviction to the international community of scholars, students, and all those interested in the present and imminent future of the nation.

Harvard University Ned Strong David Rockefeller Center for Latin American Studies Executive Director Cambridge, MA, USA June 2015

Preface by Larry Birns, Council on Hemispheric Affairs, Washington, D.C.

In this book, Council on Hemispheric Affairs’ Senior Research Fellows Roland Benedikter and Katja Siepmann deliver a unique analysis that drops like a forest green jewel in the greenery of most of the other recent publications on Chile. In fact, this work is one of the most valuable volumes on the subject in English that is available. It analyzes all aspects of Chilean politics, economics, culture, as well as ﬁ scal and educational issues, along with many of the major challenges that lie ahead. Benedikter and Siepmann’s analysis captures the push–pull nature of the current situation in Chile. This book is recommended to all those interested in the current situation of Chile who are looking to broaden their knowledge of this South American nation. It not only covers a plethora of South America’s complex political landscape, but also helps the reader to understand the underlying structures and mechanisms that are giving a major shape to Chile’s several paths of development. As one of the few countries regarded as an example of prosperity and progress in contemporary Latin America, Chile in one way or another is almost certain to prove to be an example that affects the current rise and future role of the continent. It is no effort for a Chilean student like me to warmly recommend this brilliant text to students, teachers, and international experts interested in tackling contemporary Chilean matters, as well as those who are concerned with the situation and perspectives of South America in general. Unlike studies by knowledgeable partisan think-tanks, this work does not embrace a political stance. Rather, it sustains an objective viewpoint. The authors’ approach is likely to set the standard for timely and thoughtful analyses of Latin American affairs.

Council on Hemispheric Affairs Larry Birns Washington, DC, USA Director June 2015

Contents

1 Introduction ...... 1 Roland Benedikter and Katja Siepmann 2 The Economic Dimension: A Nation Grown by Means of Neoliberal Policies ...... 5 Roland Benedikter and Katja Siepmann 3 The Cultural Dimension: A Nation in Search of Identity Between the Competing Narratives of the “Center-Right” and the “Center-Left” ...... 35 Roland Benedikter , Katja Siepmann , and Fabian Kupper 4 The Political Dimension: Chile After the Presidential and General Elections of 2013—What Future? ...... 79 Roland Benedikter , Katja Siepmann , and Miguel Zlosilo 5 The Social Dimension: Inequality and Redistributive Policies. Ideas for Reform ...... 103 Roland Benedikter and Katja Siepmann 6 The Fiscal Dimension: Greater Fairness at the Price of a Slowing Economy? The Ideological Debate Behind Bachelet’s Envisaged Tax Reform ...... 127 Roland Benedikter , Katja Siepmann , and Miguel Zlosilo 7 The Educational Dimension: Michelle Bachelet II’s “Master Plan” for Chile’s Future—The Reform of Education ...... 159 Roland Benedikter , Katja Siepmann , and Miguel Zlosilo 8 Conclusion and Outlook: Chile, Quo Vadis? Chile’s Additional Five Future Issues to Address. A Chance for Progress ...... 189 Roland Benedikter and Katja Siepmann

xiii

About the Authors

Roland Benedikter , Dott. Dr. Dr. Dr. (lead author) is a European Public Intellectual, Political Scientist, and Sociologist serving as Research Scholar of Political Analysis at the Orfalea Center for Global and International Studies of the University of California at Santa Barbara, Trustee of the Toynbee Prize Foundation Boston, Senior Research Fellow of the Council on Hemispheric Affairs Washington DC, and Full member of the Club of Rome. Previously, he served as Research Afﬁ liate 2009–2013 at the Freeman Spogli Institute for International Studies, Stanford University and as Full Academic Fellow 2008–2012 of the Potomac Institute for Policy Studies Washington DC (where he remains on the editorial board of the Institute’s journal STEPS) and was active for 8 years (1995–2003) in European politics: the Autonomous Government of South Tyrol, a European model region on the border between Italy and Austria, the Federal Union of European Nationalities FUEN and the Assembly of European Regions AER. He was External Examiner and Adviser of two practice-oriented social science study programs of the University of Plymouth, UK, and of a study program on Preschool Peace Education of the University of Kosovo. He has written for Foreign Affairs , Harvard International Review (where he is on the Advisory board), The National Interest , Global Policy , Global Social Policy , New Global Studies , Blätter für deutsche und internationale Politik , European Foreign Affairs Review and Challenge : The Magazine of Economic Affairs, and is a frequent commentator for the Italian national broadcast company Radiotelevisione Italiana (RAI ), the German newspaper Die Welt Berlin and the international commentary magazine The European . He is co-author of two Pentagon and US Joint Chiefs of Staff White Papers on the Ethics of Neurowarfare (Pentagon Press, February 2013 and April 2014) and of Ernst Ulrich von Weizsäcker’s Report to the Club of Rome 2003: Limits to Privatization: How to avoid too much of a good thing (English 2005, Chinese 2006, German 2007). He is Full Member of various European associations of Political

xv xvi About the Authors

Science, won four science awards, and his publications include more than 200 articles and book chapters, 19 books (among them two multidisciplinary nation studies on China), and 19 encyclopedia articles. Contact: [email protected]. edu or [email protected].

Katja Siepmann , M.A. (second lead author) is a sociopolitical analyst who cooperates with the Social Research Institute “Opina” in Santiago de Chile. She is Senior Research Fellow of the Council on Hemispheric Affairs Washington DC, Member of the German Council on Foreign Relations, Lecturer at the Faculty of Interdisciplinary Cultural Sciences of the European University Viadrina Frankfurt/Oder and has written for Foreign Affairs , Harvard International Review and Challenge : The Magazine of Economic Affairs . Contact: [email protected].

Miguel Zlosilo , M.A. is Director of Analysis and Methodology at the Social Research Institute “Opina” in Santiago de Chile. He is the responsible head for policy studies and public opinion polls carried out for national and international media, Chilean and Latin American enterprises, political parties, politicians, and the Chilean government.

Fabian Kupper , Dr. is a political commentator with a doctorate in Applied Cultural Sciences, specialized in the quantiﬁ cation of narrative complexity. He received academic degrees in literature, philosophy, and theology and later added economics and psychology. His focus is on analyzing sociocultural discourses in interdisciplinary manners, and as embedded in noncultural, mainly political and social narratives. Chapter 1 Introduction

Roland Benedikter and Katja Siepmann

This book is a “nation study” on Chile, Latin America’s most successful country of the past decades. A classical multidisciplinary area analysis, it concentrates on the history of the remnants of authoritarianism and their impact on Chile’s democratic culture of the present, the perspectives of Chile after the elections of 2013 and the second mandate of Michelle Bachelet. This text is part of our attempt to provide timely multidisciplinary area studies that neither exaggerate in focusing on single details nor overstretch the bow by going too far in the macro-sphere. We try to understand and explain the moment of a nation and its perspectives in a given phase and constellation in an intermediate, down-to-earth, condensed, and comprehensive manner that can serve as a practical basis for apprehension and debate rooted in the historical framework and including as many relevant sectors of society involved as possible. The goal is to identify the core motives of the nation’s development and to sketch an overall outlook in an encompassing way rather than to comment on too many daily occurrences. Early versions of single chapters of this book have been published in Foreign Affairs , Harvard International Review , and Challenge : The Magazine of Economic Affairs. We remain grateful to these journals and their institutions for their sustained support of our work on Latin America.

R. Benedikter (*) University of California , Santa Barbara , CA , USA e-mail: [email protected] K. Siepmann Opina Market Research Institute , Santiago , Chile e-mail: [email protected]

We have structured the book according to what we consider key areas of development in modern democratic societies, and in particular of societies in “deep” transition such as contemporary Chile: 1. The economic dimension; 2. The cultural dimension; 3. The political dimension; 4. The social dimension; 5. The fi scal dimension; 6. The educational dimension; 7. Five additional critical issues for the future. The fi r s t part, the economic dimension , reaches furthest back into the past. It explains how the country’s success of the past decades—since the 1980s and 1990s—has been built mainly upon economic achievements on which most other aspects relied, in particular its sociopolitical processes. In turn, it was the in many ways unusual consensus between governments and oppositions on most issues of political economy—the “politics of agreements”—that fostered outstanding economic progress, though leaving many questions about post-dictatorial democracy open. Part 1 serves as a general introduction to the nation’s basics that constitute its current reality, including unsolved problems and open tasks after four decades of— overall considered as successful, but socially not fully balanced—neoliberal economic policies. The second part, the cultural dimension, focuses on the era of President Sebastián Piñera (2010–2014), the fi rst center-right government since the post- dictatorial transition to democracy in 1988–1989. This chapter explores the trends and changes in social psychology and collective mentalities since the start of Piñera’s tenure, as well as the competition between different public narratives over the past couple of years about what a “good society” in Chile could and should look like. Since Piñera was the fi rst Chilean president to fully grasp the rising importance of social psychology and collective narratives as “contextual political factors,” questions of identity have become crucial elements of public discourse in today’s Chile. The third part, the political dimension , concentrates on the beginning of Michelle Bachelet’s second term in government (Bachelet II, 2014–2018). It explains the background, implications, and perspectives of the presidential and general elections of November and December 2013, the shift between the governments Piñera and Bachelet II, the legal and institutional mechanisms in play, the remnants of the Pinochet dictatorship in the electoral system, and the entry of former student protest leaders in traditional political structures. The chapter concentrates on the program of Bachelet II and on future scenarios presented by the various parties and alliances represented in the political institutions. It also analyzes the impact of the student protest movement on the current and foreseeable sociopolitical scenarios. The fourth part, the social dimension , provides an analysis of Chile’s social situation at the beginning of the offi ce of Bachelet II, including inequality, redistributive policies, social and class struggles, and ideas for reform. Chile features the highest level of inequality of all 34 OECD member states and thus faces the question of how 1 Introduction 3 to mitigate social rifts to avoid the widening of the gap between those sections of the population who have access to tools and public life and are able to participate, and those who aren’t. The fi fth part, the fi scal dimension, considers the opportunities and problems of Bachelet II’s envisaged tax reform, i.e., the centerpiece of her reform program for the country, and the complex intertwinement of the fi scal and economic systems as motors of growth and factors of political and social power. The sixth part, the educational dimension , refl ects the state of affairs and the perspectives of Chile’s envisaged grand educational reform. It also presents some observations on the transformational force of Chile’s sociopolitical protest movement stemming from and rooted in the universities and high schools. Can and will student protest continue to trigger changes in the existing societal arrangement? And, in turn, how will educational reforms impact the student protest movement? Finally, the seventh part, fi ve additional critical issues for the future , offers an outlook on Chile’s future and discusses fi ve issues that will critically impact the country’s transition as well as—in particular—the governability of its change: (1) Democracy and new media, including the politics on (and of) the Internet; (2) Foreign policy, new strategic alliances, and participation in global governance; (3) Sustainable approaches to resources and energy; (4) Global climate change and care of the environment; (5) Resilience, security, and peace politics. The fact that some key actors of Chile’s current transition such as the government, the center-left and center-right alliances, the political parties, the infl uential economic families, the elite and the student protest movement and its protagonists play a signifi cant role and are found in almost every chapter is no accident. It points toward their outstanding role in the present process of transition; and it shows that like most Latin American countries Chile continues to be a microcosm with its own laws, structured by more constants than variables, and—most important—by a still rather restricted number of actors. We thank Majella Horan for reading the manuscript and correcting the language. Santiago de Chile, Santa Barbara, and Washington, DC, June 2015

Roland Benedikter Katja Siepmann Chapter 2 The Economic Dimension: A Nation Grown by Means of Neoliberal Policies

Roland Benedikter and Katja Siepmann

Often branded the “Switzerland of the global South”, Chile in many ways corresponds to its excellent economic and ﬁ nancial reputation when observed from the outside—but steers through rough waters to maintain enthusiasm with its own citizens. One family’s tale embodies the history of the country between imported neoliberalism and domestic socio-economic emancipation that led to today’s situation: the story of the Matte siblings. To know this story and thus to understand the economic basis of current Chile and its inbuilt ideological battles that reach back to the 1970s and 1980s is the indispensible prerequisite to getting an insight into the constellation and perspectives of the nation as it stands today, including its political, ﬁ nancial, social, and cultural dimensions.

A Recipe for Success from Chicago

More than 40 years ago, Eliodoro Matte was a M.B.A. student at the University of Chicago. In recognition of his outstanding success thereafter, he was invited to speak at the graduation ceremony of the university’s Business School on 15 June 2008. On this occasion, Matte spoke about the inﬂ uence of the school, the

R. Benedikter (*) University of California , Santa Barbara , CA , USA e-mail: [email protected] K. Siepmann Opina Market Research Institute , Santiago , Chile e-mail: [email protected]

© Springer International Publishing Switzerland 2015 5 R. Benedikter, K. Siepmann (eds.), Chile in Transition, DOI 10.1007/978-3-319-17951-3_2 6 R. Benedikter and K. Siepmann birthplace, and stronghold of global neoliberalism on his subsequent career and on the destiny of Chile: The University of Chicago brought all the ideas and commitments to my mind, my soul and my spirit that penetrated and changed my life and my company, and most important, my country forever. 1 Matte emphasized that Chicago’s radical free-market-ideology was ﬁ rst crucial to transform my enterprise CMPC from a locally operating company within a protected market into an international player in a highly competitive business world 2 ; and second, that it was decisive to create the most progressive, successful und fair economic environment of South America in Chile, years before Reagan and Thatcher transformed free markets into an international model.3 The interrelation between his company’s performance and its role in Chile’s overall development pointed out by Matte is no accident. It simply corresponds to the facts. Indeed, some of the most brilliant examples of successful Chilean entrepreneurship in the recent decades are the siblings Eliodoro, Bernardo, and Patricia Matte, owners of the paper-empire CMPC, also known as La Papelera. The company was founded in 1920 and has specialized in the production and commercialization of cellulose, paper, pulp, tissue, and other paper products. Today, it is the fourth largest cellulose provider in the world and produces 2.8 million tons a year, 4 from which it exports 81 % to Asia, the USA, and Europe. The company possesses more than a million hectares of forests in Chile, Argentina, and Brazil and is feeding 8,500 workplaces in Chile and 6,500 abroad (Brazil, Argentina, Peru, Uruguay, Colombia, and Mexico). The CMPC group ended the year 2012 with a balance sheet of US$4,759 million of sales, US$914 million of earnings before depreciation, interest, and taxes (EBDIT), a net income of 202 million, and US$14,046 million of assets.5 In 2013, the sales of CMPC celulosa, one of its sub-companies, alone amounted to US$1,794 million.6 The Matte family controls the CMPC group by

1 “La Universidad de Chicago le dio a mi mente, a mi alma, a mi espíritu las ideas y compromisos que me permearon y cambiaron mi vida y mi empresa, y que cambiarían, sobre todo, a mi país.” Quoted according to: El Mercurio. Economía y Negocíos online: Eliodoro Matte da cuenta del vasto legado de Chicago en Chile y la Papelera. In: El Mercurio, 16 de junio de 2008, http://www. economiaynegocios.cl/noticias/noticias.asp?id=48662 . 2 Ibid. 3 Ibid. 4 CMPC Celulosa: Perﬁ l (2012 and 2013), Marzo 2013 y Marzo 2014, http://www.cmpccelulosa. cl/CMPCCELULOSA/interior.aspx?cid=2&leng=es . 5 Empresas CMPC: Company Overview. Presentation prepared for the BCI investor meeting, Luis Llanos, CFO, April 2013, p. 3, http://www.empresascmpc.cl/wp-content/uploads/2012/06/ Company-Overview-BCI-Investor-Meeting-en.pdf . 6 CMPC Celulosa: Perﬁ l, loc cit. 2 The Economic Dimension: A Nation Grown… 7 owning 55.3 % of the shared capital7 , and in 2013, was, according to Forbes Magazine, the second wealthiest family of Chile with a fortune of US$10,200 million. 8 Interestingly, 11 % of the capital of CMPC stems from private pension funds, which all Chileans are obligated to pay into as a preventive measure by law.

Promotion of Free-Market Ideology

It is not only their success and wealth that makes the Matte family both an object of admiration and of opposition among peers and citizens, thus confi rming their status as part of the “objective” historical symptomatology of the country. It is also their convincing rhetoric and cultural fi nesse as leading public promotors of free-market ethics in Latin America that puts them at the centre of the history of Chile’s economic culture. When speaking in public, the catholic Matte family with Catalan roots transmits the conviction of “conservative freethinkers” remaining above the political parties.9 When taking a practical stance towards principle issues of development though, the family positions itself unmistakably at the centre and the centre- right of the political spectrum. Being both admired and disputed, sustained and contested at the same time, the publicly active members of the family share the destiny of most great Latin American entrepreneurs, statesmen, and leaders. Eliodoro Matte, for example, is a typical public fi gure of the continent. He is highly integrated and networked within the intellectual academic world, being a former lecturer at the prestigious Pontifi cia Universidad Católica de Chile ,10 president of the neoliberal think tank Center of Public Studies of Chile, or CEP ( Centro de Estudios Públicos de Chile ),11 and ex- vice president of the Universidad Finis Terrae . 12 He fi nances the Centro de Investigación Científi ca de Valdivia, one of the most important and modern in the

7 Empresas CMPC: Nuestra Empresa, Mayo de 2014, http://www.cmpc.cl/?page_id=22 . 8 C. Leal: Forbes actualiza lista de las 5 personas más adineradas de Chile. In: biobiochile.cl, 7 diciembre 2012, http://www.biobiochile.cl/2012/12/07/forbes-actualiza-lista-de-las-5-personas- mas-adineradas-de-chile.shtml . 9 M. Paz y F. Saleh: Patricia Matte, la guardiana del lucro. In: La Nación Domingo, 15 de abril de 2007, http://miguelpaz.blogspot.de/2007/04/patricia-matte-la-guardiana-del-lucro.html . 10 “Obtuve un trabajo como profesor en la Universidad Católica.” In: El Mercurio. Economía y Negocíos online: Eliodoro Matte da cuenta del vasto legado de Chicago en Chile y la Papelera, loc cit. Cf. J. Donoso Jiménez: Violencia política en el sur de Chile. La Alianza Territorial Mapuche Pü Löf Xawün y el Estado chileno en el gobierno de Michelle Bachelet, Santiago de Chile 2011, p. 203, http://www.flacso.edu.mx/biblioiberoamericana/TEXT/DOCCS_VII_promocion_2008-2011/ Donoso_J.pdf . 11 According to the offi cial website of CEP: http://www.cepchile.cl/dms/lang_1/base/nosotros.html . 12 P. Walder: Chile. El clan Matte. In: Punto Final, edición N° 732, 29 de abril 2011. Re-published in: La Historia del Día, abril 2011: http://lahistoriadeldia.wordpress.com/2011/05/24/chile-el- clan-matte-tigres-de-papel/ . 8 R. Benedikter and K. Siepmann country13 and the infl uential centers of public and political opinion Instituto Libertad y Desarollo14 and Fundación Paz y Ciudadana . Moreover, Eliodoro is multi-talented: He is not only interested in economy, education, and politics, but also in the spiritual. Like some of his family members, he is said to be close to the Legionaries of Christ, a religious congregation of the pontifi - cial right founded in 1941, whose mission is to extend the Kingdom of Christ in society. His two siblings Patricia and Bernardo also maintain infl uence in the public and cultural spheres and were members of the advisory council of the TV channels Canal 13 and TVN . 15 Patricia, sometimes branded as the most powerful women in Chile, is married to another Chicago alumnus, Jorge Gabriel Larraín, known as the “second Matte” for his extraordinary brilliance in business.16 A sociologist, Patricia Matte is a leading intellectual on her own right who often states that she stands above ideologies. Indeed, she was part of both leftist and rightist governments, fi rst of the “staff” of the government led by the leftist Unidad Popular and by Salvador Allende (1970–1973), later of Augusto Pinochet’s regime (1974–1990) in charge of social politics, where she served as moderate link between entrepreneurs and the dictatorship. Today she features stakes not only in forestry and paper products, but also in telecom, banking, and shipping fi rms. She is the Chairwoman of the Society for Primary Instruction and a highly regarded counsellor of the think tank Libertad y Desarrollo . 17 The list of important positions held by the Mattes could be continued. By 2002, the family controlled more than 30 companies in different sectors (forestry, fi nance, mining, health, telecommunications, energy, harbours).18 It has been said by domestic observers that the family has been so infl uential over time that it became a protagonist both of continuity and change in the Chilean political system—not unlike some aspects of the US establishment with similarly infl uential families, such as, for example, the Harriman family.

13 J. Donoso Jiménez: Violencia política en el sur de Chile, loc cit., pp. 203–204: “Ha procurado (Eliodoro Matte) vincularse con el mundo intelectual académico y fue docente de la Pontifi cia Universidad Católica de Chile. También presidente del Centro de Estudios Públicos (CEP) y vice- presidente del consejo directivo de la Universidad Finis Terrae, además de fi nanciar el Centro de Investigación Científi ca de Valdivia, uno de los más importantes del país.” 14 “Además de las participaciones en estas empresas, la familia Matte sigue ligada a otras orga- nizaciones como el Instituto Libertad y Desarrollo, Fundación Paz Ciudadana, Sociedad de Instrucción Primaria y Centro de Estudios Públicos.” In: Empresas e Innovatión: Familia Matte en Chile, Junio 2013, http://empresaseinnovacion.blogspot.de/2012/04/familia-matte-chile.html . 15 E. Carmona Dulloa: Los dueños de Chile, Ediciones La Huella, Santiago de Chile 2002, p. 106, http://www.logoslibrary.eu/books/es/Los_duenos_de_chile.pdf . 16 “La mayor de los Matte Larraín fue muy útil al Gobierno. Elaboró soluciones para‚ el mapa de la extrema pobreza’, pero, mejor aún, sirvió de enlace entre la dictadura y los empresarios, fueran de la vieja guardia como su padre y su tío Ricardo Claro, o ‚Chicago Boys’ como su hermano Eliodoro y su marido, Jorge Gabriel Larraín, conocido como el‚ otro Matte’ por su brillantez para los negocios.” In: M. Paz y F. Saleh: Patricia Matte, la guardiana del lucro, loc cit. 17 According to the offi cial website of Libertad y Desarrollo : http://www.lyd.com/nosotros/ consejo-lyd/ , April 2014. 18 E. Carmona Dulloa: Los dueños de Chile, loc cit. 2 The Economic Dimension: A Nation Grown… 9

Economic Progress Based on “Liberalization from Above”

The result of the infl uence of neoliberal Chicago-school-formed oligarchs such as the Mattes—both as entrepreneurs and public fi gures—and similar families on Chile’s development was an exemplary economic progress both on private and public levels, based on “liberalization from above”. In recent decades, Chile has been presented to international forums as a never-ending success story of development and economic growth. Indeed, the Andean State constantly presents impressive macro-economic data: 6 % of annual economic growth (a number much greater than the global average of 3.5 %), unemployment rate below 7 % (better than the US and most European countries), and considerable levels of both foreign and domestic investment.19 These data go hand in hand with the positive evolution of the Human Development Index—a statistical indicator that refl ects national developments in education, income, and health—reaching the fi rst position in South America with 0.805 in 2011 (HDI in 1980: 0.630). In 2013, Chile’s HDI reached 0.819, ranking the country 40th in the world. In May 2010, Chile became the fi rst South American member of the Organization for Economic Cooperation and Development (OECD) in recognition of its extraordinary overall performance combined with functioning democratic institutions.20 As a consequence, Chile nowadays is considered one of the most economically and fi nancially liberal countries in the world. It is used as an example of the success of neoliberalism, in particular of strategies of alignment to the West through integration in the Western economic and fi nancial system in former “third world” countries.

2011: A Surprising Protest

But to the surprise of many, in 2011 something happened to Eliodoro Matte’s “unshakable truth”21 that Chile had become the “most progressive, successful and fair economic environment of South America”. Considering the economic indicators, international experts, including those closely familiar with the Latin American context, had reason to be surprised by news of massive demonstrations occurring across the country, the largest since the comeback of democracy in 1990. The spark spread from the student movement which, under pressure from rising study fees, demanded structural reforms and a more active role of the State in the

19 Programa de les Naciones Unidas Para el Desarrollo (PNUD) en Chile: Desarollo Humano en Chile 2012: Bienestar subjetivo: el desafío de repensar el desarollo, http://www.desarrollohumano. cl/ , pp. 16–17. 20 Ibid. 21 Quoted in: El Mercurio. Economía y Negocíos online: Eliodoro Matte da cuenta del vasto legado de Chicago en Chile y la Papelera, loc cit. 10 R. Benedikter and K. Siepmann regulation of the increasingly profi t-oriented educational system. These protests soon overlapped with other, local-specifi c movements such as the strikes of mine- workers, women’s emancipation movements, indigenous and environmental movements, and eventually converted into a nationwide social protest initiative. Even though the single movements had specifi c causes and demands, most of them were a breakout of indignation and shared the expression of discontent with general patterns of Chilean society. The nation-wide movement, then, transformed the protesters from the sectorial to the systemical: to critics of basic principles of the country’s economic development, the political system, and of a socio-political culture seen as “hegemonic” and still dominated “from above” by many. The social mobilization of 2011 not only surprised by its diversity, but also by its capacity to integrate differing practical interests and ideological groups into a movement aiming to uphold principles, to maintain continuity over time, and third, by its massive size. Approximately one third of the population older than 18 years was eventually directly or indirectly involved.22 Although in 2013 and 2014, the demonstrations continued on much lower levels and widely disappeared from international attention, discomfort still hangs in the air.

The Reasons, Part I: Disputed Bipartisan Consensus and Growing Inequality

The reasons for the agitated situation are multiple. Most importantly, there is one issue in the background of the nation’s economic success that is often overlooked. As Chile’s then US Ambassador (2006–2009) and later Minister of Foreign Affairs (2009–2010) Mariano Fernández rightly commented on the basis of the economic success of Chile, an unusually wide-reaching bipartisan political consensus beyond ideological battles between left and right has been—and remains—all important for national economic progress: Behind this economic success we have had a very important political background. I will describe it this way: After the end of the Pinochet-era the Concertación —i.e., the [governing] center-left group of political parties—led the country towards [this] big success. But we have in some way, in a tacit way, a big and important political consensus also with the opposition. Economic and social measures receive a permanent support beyond the governing majority . And this is crucial for countries like the Latin American countries, after military dictatorships or internal conﬂ icts like in many countries of the region. This is very important to assert, because if not it is very ununderstandable to see how, [and] why we have had such a big success […] It is not just an economic group established in the political tower in the capital Santiago developing certain measures. It is a real [bipartisan] political consensus [combined] of course [with] some successful government decisions. We have [had] growth, steadily and enduring [for] these last 15 years, and […] we have reduced poverty from 40% to 30% […] It is very impressive, but you cannot do that without a broad political support.23

22 Programa de las Naciones Unidas Para el Desarrollo (PNUD) en Chile: Desarollo Humano en Chile 2012, loc cit., pp. 41–42. 23 M. Fernández: Mariano Fernández, Ambassador of Chile to the United States, speaks with GDTV on Latin America (September 2007), https://www.youtube.com/watch?v=dY-IK3V32cc . 2 The Economic Dimension: A Nation Grown… 11

But this “tacit agreement” on (mostly neo-liberal) economic policies between the center-left and center-right alliances, in place over decades, also led to the critique that such a “politics of agreements” strongly relying on personal friendships and the meta-party infl uence of families and circles tends to undermine the rules of democracy, where government and opposition should debate different positions on the right things to do in the public space, not behind closed doors and in an objective, not—as often the case in Chile—a rather personal, or even “familiar” atmosphere. Such was and is the critique put forward by the opposition since the outbreak of nation-wide protests in 2011. And this remains the critique of those representatives of the protest movement who were elected into the parliament in the framework of the presidential and general elections of 2013, thus becoming part of the political institutions. In addition, the outcome of economic success was never simply fl awless and clean. It produced new challenges, of which four were and remain of particular importance for the country: [As a result of this economic progress,] we have now in Chile social demands, very strong [ones], because people say the pie is becoming so big that I [want] to have a bigger part of the pie. This happens with the health workers, with teachers and with other associations and worker groups. We [thus] face a challenge, and this challenge is the main goal of this government, [and of] the coming government[s]. The main challenges in Chile are innovation ; we must innovate a lot more. We are performing well, but we must do much more. Second, inequality : With the globalization of our economy, the open market has produced a classical market situation: that the rich groups are growing much faster, much quicker, and much more than the lower working groups. We have a country where everybody is performing well in economy, but the poor are earning much lesser than the rich. And the third important challenge we have is to deconcentrate the country demographically. We have almost 40% of the population in Santiago. In this sense, we have an almost empty country [elsewhere]. This is absolutely different from the situation we have in Brazil or even in Venezuela. Fourth, we have a strong discussion about education. We have some social explosions in the educational fi eld, but if you look […] on the backgrounds, you will understand why this is happening in Chile. You should think that today 70% of the students at the universities are the fi rst members in their families that attend a university. Therefore the change in education is so radical, that it is rather diffi cult to control the movement. We have never had this: 600,000 students at the universities. This is enormous; it is a big proportion [of the population].24

The Reasons II: Social Discontent Caused by Rising Prices, Economization of Everyday Life, and Financial Pressure

But the reasons for social unease are even broader than this. As the Chilean consumer service Sernac (Servico Nacional del Consumidor) reported in April 2013, citizen’s discontent is unlikely to end with the exhaustion of popular protest on the streets.

24 M. Fernández: Mariano Fernández, Ambassador of Chile to the United States, speaks with GDTV on Latin America, loc cit. 12 R. Benedikter and K. Siepmann

On the contrary, it may continue to rise—but it may shift from the streets to the institutions. The signals seem to be unmistakable, and they are rooted in everyday life. In the health system , the administrative appeals and written complaints against rising prices have tripled between 2010 and 2011 (2010: 9,100; 2011: 25,767).25 In the fi nancial sector, formal complaints against banks have risen by 139 % between August 2011 and August 2012, with more than 27,000 appeals between May and August 2012 alone. 26 Among the causes are invoices for products and services neither requested nor used by the customers, transactions of unclear origin, excessive commissions not included in contracts, and corruption and malpractice. One of the most important issues debated among Chilean citizens is rising prices in crucial niches, hidden in the overall infl ation report by stable or decreasing prices in other, less needed fi elds. As Chile’s index of consumer prices IPC (Índice de precios del consumidor) indicates, food prices went up by 3.1 % between March 2012 and March 2013, alcohol and tobacco by 7.6 %, health care by 4.1 %, education by 5.1 %, water and electricity by 2.4 %, and restaurants and hotels by 7.5 %. 27 Other offi cial sources on price increase report that – Food prices in Chile went up 9.8 % from April 2011 to April 2012. The average in price variation in other South American countries was 8.6 % for the same period. Chile is on the fi rst rank of rising prices in the food sector; Peru, Mexico, and Brazil did not exceed 6.9 %, Paraguay 0.1 %, Bolivia 1.8 %, Costa Rica 2.7 %, Colombia 4.7 %, Ecuador 6.1 %.28 – Between 1995 and 2005, prices in education went up 92.8 % on average.29 – Housing prices increased by circa 20 % in some neighbourhoods of Santiago during 2012 alone.30

25 A. Mayol: El derrumbe del modelo: La crisis de la economía de mercado en el Chile contemporáneo, Santiago de Chile 2012, p. 24. 26 Servicio Nacional del Consumidor SERNAC: Estudio: Reclamos contra bancos aumentaron 139 % en segundo cuatrimestre de 2012, 19 de noviembre de 2012, http://www.sernac.cl/ estudio-reclamos-contra-bancos-aumentaron-139-en-segundo-cuatrimestre-de-2012/ . 27 Instituto Nacional de Estadísticas Chile: Índice de precios del consumidor IPC, Boletín Marzo 2013, http://www.google.com/cse?cx=012848251195989658681%3Abeo8izykfuy&ie= ISO-8859-1&ie=ISO-8859-1&q=marzo+2013#gsc.tab=0&gsc.q=marzo%202013&gsc.page=1 . 28 M. Celedón: “Chile se posiciona como el país con mayores alzas en los precios de los alimentos en Latinoamérica”. In: Biobiochile.cl, 24 abril de 2012, http://www.biobiochile.cl/2012/04/24/ chile-se-posiciona-como-el-pais-con-mayores-alzas-en-los-precios-de-los-alimentos-en-latino- america.shtml . 29 Estrategia online: En Precios relativos: Por qué la Educación Superior Chilena Es la Más Cara del Mundo. In: Estrategia. El Diario de Negocios de Chile, July 04, 2011, http://www.estrategia.cl/ detalle_noticia.php?cod=41635 . 30 Bloomberg News: Precio de las viviendas en Chile aumentan 20 % indicando que el país deberá limitar el crédito. In: La Tercera Negocios, 20 Marzo 2013, http://www.latercera.com/noticia/ negocios/bloomberg-news/2013/03/874-514537-9-precio-de-las-viviendas-en-chile-aumentan- 20-indicando-que-el-pais-debera.shtml . 2 The Economic Dimension: A Nation Grown… 13

– Rent prices were (and are) also on the rise. According to advertisements published on Portal Inmobiliario, rent prices for apartments in the metropolitan region of Santiago went up 21.87 % in 2012, rent for houses 12.9 %.31 While some of these fi gures may not seem excessive when compared to international standards, particularly in global metropolitan areas, the continuous rise of already high basic prices is felt by many as disproportional to the average Chilean wages. For example, many young lawyers start their job earning around 500,000 Chilean pesos (CLP, or chil$) per month, which is US$1,041; €808; or £682— an amount barely suffi cient for surviving 5 years ago and that hardly amounts to a living wage today. In essence, while prices have reached an international top level, wages in many cases haven’t. As a result, indebtedness is increasing also in the highly qualifi ed and well- educated sections of the population. In 2012, households in Chile were indebted on average by 59 % of their yearly combined income (2005: 50 %).32 While this may seem tolerable if compared with the US fi gure of 112 % (2011), the crux is the credit costs, which according to a study of Sernac of December 2012 can amount up to 93 % for a 36-month loan between 500,000 and 1,000,000 CLP.33

“The Man on the Street”: Rather Sceptical About the Future

There are multiple social effects. The most important are changes in the average social psychology: mistrust, an increasing “everybody for themselves” mentality, and social desolidarization. According to a study of the Chilean Public Study’s Centre CEP (Céntro de Estudios Públicos de Chile), in 2012 76 % of Chileans agreed with the statement: “One cannot trust others” and almost 50 % agreed that “to feel lonely is normal”. 34 Thus, a feeling of social desolidarization within an ultra-liberal environment seems to have become a socio-cultural leitmotif of contemporary Chile, at least to a certain extent. While overall quality of life has risen, general contentment sank—in

31 T. Flores et al.: Precio de arriendo de viviendas en Santiago aumentó sobre 20 % en 2012. Corredoras afi rman que alza fue por actualización de los contratos y aumento de la demanda. In: La Tercera Negocios, January 15, 2013, http://www.latercera.com/noticia/negocios/2013/01/655- 503767-9-precio-de-arriendo-de-viviendas-en-santiago-aumento-sobre-20-en-2012.shtml . 32 La Tercera: CCS: endeudamiento de los hogares se mantiene estable pese al fuerte aumento del consumo. In: La Tercera Negocios, January 16, 2013, http://www.latercera.com/noticia/ negocios/2013/01/655-504004-9-ccs-endeudamiento-de-los-hogares-se-mantiene-estable-pese- al-fuerte-aumento-del.shtml . 33 Servicio nacional del consumidor SERNAC: Estudio: Diferencias de casi 400 % en costo anual de créditos de consumo, 20 de septiembre de 2012, http://www.sernac.cl/estudio-diferencias- de-casi-400-en-costos-de-creditos-de-consumo/ . 34 Céntro de Estudios Públicos de Chile: Estudio Nacional de Opinión Pública Proyecto Auditoría a la Democracia 2012, January 15, 2013, p. 45, http://www.cepchile.cl/1_5211/doc/estudio_nacio- nal_de_opinion_publica_proyecto_auditoria_a_la_democracia_2012.html#.UZIByru8D3J . 14 R. Benedikter and K. Siepmann particular when it comes to social mobility. As shown in the study “Encuesta Nacional Bicentenario 2012” of the Market Research Institute Adimark and the Universidad Católica, in 2012, only 36 % of Chileans believed that a home can be earned from personal work (2009: 55 %), only 31 % believed that one can live as an independent small or medium entrepreneur (2009: 51 %), and only 17 % believed that poverty can be reduced (2009: 27 %).35 As a result, many Chileans today tend to be rather negative when relating their personal future to the future of their country. According to the Adimark-Católica fi ndings, only 24 % believed in 2012 that greater equality can be achieved (2006: 41 %). Only 24 % believed that Chile will remain a peaceful and unifi ed country throughout the next 10 years (2006: 43 %), 24 % believed that the nation can halt environmental decline (2006: 30 %), 43 % believed in a better social accessibility of the educational system (2006: 68 %), and 51 % believed that Chile may make progress as a society in the next 10 years (2006: 59 %).36 Overall, the trust of citizens in politics and institutions has declined in recent years. That is not really surprising if the reports of independent Chilean intellectuals and activists are plausible. As Manfred Max Neef, the 1983 Awardee of the Right Livelihood Award (or “Alternative Nobel Prize”), reported on the occasion of the launch of the new Master program “Desarrollo a Escala Humana y Economía Ecológica” (“Development according to human measures and ecological economy”) at the Universidad Austral de Chile in the Southern town of Valdivia in April 2013,37 Chile’s speculative fi nancial economy in 2012 has grown to be 50 times larger than the real economy that “manufactures real things”38 (Barack Obama). According to Neef, Chile today features the only government worldwide that doesn’t own one single drop of the water on its soil, has an imbalance between national economic performance too heavily based on resource extraction and citizen’s participation in its overall benefi ts, and has a lack of equal access to core fi elds such as education and healthcare. Neef claims that one problem at the root of many others is the centralism of the national institutions that still do not respect regional differences in a highly differentiated country that, between its North and South, stretches out over a distance of 4,300 km, larger than the area between the North and the South of Europe—leading to environmental problems often caused by Central Government disinterest in or poor information about regional and local realities in distant parts of the nation.

35 Universidad Católica y Adimark GfK: Encuesta Nacional Bicentenario 2012, p.18, http:// politicaspublicas.uc.cl/cpp/static/uploads/adjuntos_publicaciones/adjuntos_publicacion.archivo_ adjunto.92bd1cf4f09bf8be.452e4e61632e20426963656e74656e6172696f2055432d4164696d617 26b2031325f5645525349c3934e2046494e414c2e706466.pdf . 36 Universidad Católica y Adimark GfK: Encuesta Nacional Bicentenario 2012, loc cit., p. 18. 37 Universidad Austral de Chile, Magíster en Desarrollo a Escala Humana y Economía Ecológica: Conferencia Dr. Manfred Max Neef: “Nuevo paradigma de desarrollo basado en el bienestar y la felicidad”, April 5, 2013: http://magisterescalahumana.cl/noticias/26-conferencia-dr-manfred- max-neef-nuevo-paradigma-de-desarrollo-basado-en-el-bienestar-y-la-felicidad . 38 The White House Ofﬁ ce of the Press Secretary: The 2013 State of the Union Address by president Barack Obama, February 12, 2013, http://www.whitehouse.gov/state-of-the-union-2013 . Cf. R. Foroohar and B. Saporito: Made in the USA. In: Time Magazine, April 22, 2013, p. 24. 2 The Economic Dimension: A Nation Grown… 15

Ambiguous Evaluations of Chile’s Current Society

The cohabitation of excellent fi gures of national economic development with high levels of social discontent and individual scepticism about the future leads to ambiguous evaluations of Chile’s society. Some critics considered the protest mobilization of 2011 as the wrong answer: as dangerous destabilization of a growing country, and as a threat to the indispensable prerequisites of growth and wealth: governability, stability, and sustainability. Others, though, evaluated the incidents rather as a positive impulse for the still ongoing democratization process, citing the way that people started to claim infl uence and participation in the renewal process of society. Chile has a long history of student mobilization dedicated to emancipative issues, but the participation of the population at large in demonstrations against the government was something new in the post-dictatorial era. If Chile has sometimes been branded as a “spineless democracy”, it is a legacy of the shock-effects of dictatorship. If nothing else, those who coined this phrase were to a certain extent taught a lesson in 2011, when participation in public issues and in the debate about the future was the most accentuated in the democratic history of the country. Considered together, the nation has had many astounding achievements over the past decades, which are rightly celebrated by the international community. But today they seem to coexist with an over-proportionate degree of preoccupied personal evaluation of the state of affairs by the majority of its citizens—a fact that is barely noted beyond the borders of the country. It points toward the perception of a tendency to an unequal distribution of the benefi ts of development. As a consequence, even though national economical statistics and technical indicators remain indicative, they alone seem no longer encompassing enough to draw conclusions about the perceived welfare and the perspectives of a nation as a society. Issues essential for the post-traditional digital age, such as the perception of equal access, social fairness, and socio-psychological well-being, must be included. In times of the global rise of contextual politics—such as social psychology, subjective narratives and aesthetics, post-ideological values, and new social media—to core political factors of similar or even equal importance to traditional political factors such as party politics, institutional politics, and political economy, statistical assessments alone can be incomplete or even misleading in the analysis of change and the anticipation of the respective challenges. Thus, for a deeper understanding of the ongoing social processes in Chile, it is useful to include the everyday experiences, i.e. the subjective perceptions of people and their collective moods as related to their lifestyles, in order to gain a more appropriate, multi- faceted picture. 39

39 Cf. R. Benedikter: Lifestyles. In: M. Juergensmeyer and H. K. Anheier (ed.s): The SAGE Encyclopaedia Of Global Studies. 4 Volumes, SAGE Publishers London and Thousand Oaks 2012, Volume 2, pp. 1076–1080. 16 R. Benedikter and K. Siepmann

The Core Mechanism: “Chile Is Growing, But Not Developing”?

First of all, it is important to critically examine the tale of Chile’s development as a clean and in essence fl awless success story that should serve as a model for the surrounding geopolitical area, the global South, or even for the rest of the developing world, as US-president Barack Obama euphorically put it during his visit to Chile in March 2011.40 The country reports record-breaking numbers of growth, but too few still seem to profi t from the nation’s admirable advancement. Thus, the country seems to have been declining into “two Chiles”, 41 as The Economist branded the social situation. On the one hand, there is a section of the population that apparently has access to all resources and means and features incomes that are found in the richest countries on earth. On the other hand, 60 % of the citizens have an average income comparable to the African State Angola. Approximately 70 % of Chileans, particularly those outside the metropolitan center areas, earn around US$650 per month.42 This social division may appear as a remnant of the “classical” typology of “old” Latin America, surviving into our “postmodern” and globalized times. It is particularly perceptible in the geography of the capital Santiago. While life remains precarious in many of the neighbourhoods, the eastern community of the city—Las Condes—has become symbol for exceptional growth and wealth, and for a globalized life. This is where most of the international companies have their offi ces in modern skyscrapers, and where new luxury stores spring up every day. It is a vibrant and international place where large amounts of money are continuously spent in gigantic shopping malls, and where life is thriving as in the best spots of the USA, Europe, or other high-developed countries. In contrast, the “other”, second Chile features a labour market with working days of up to 12 h (many people have two or more jobs in order to survive) and a current minimum income of CLP164,000 Chilean pesos43 a month after social-security contributions ($347, €271, or £229), which is just above the poverty line. These earnings don’t correspond either to the country’s growth rate or to the growing prices of basic goods, including food, clothes, and housing. At the same time, in 2013 more than 10 % of the population was offi cially living below the poverty line.

40 B. Obama: Remarks by President Obama on Latin America in Santiago, Chile. Palacio de La Moneda Cultural Center, Santiago. In: The White House Offi ce of the Press Secretary, March 21, 2011, http://www.whitehouse.gov/the-press-offi ce/2011/03/21/remarks-president-obama-latin- america-santiago-chile . 41 The Economist: A political futbol. Michelle Bachelet’s struggle to combine equity and growth in Chile, loc cit. 42 Globedia.com: ¿De la crisis educacional a la crisis sistémica? Aproximaciones al confl icto estudiantil chileno, September 22, 2011, http://globedia.com/crisis-educacional-sistemica- aproximaciones-confl icto-estudiantil-chileno . 43 M. Krememan: Salario Mínimo de chil$205.000: seguimos echando la tierra debajo de la alfombra. In: The Clinic, 26 Marzo, 2013, http://www.theclinic.cl/2013/03/26/salario-minimo-de- 205-000-seguimos-echando-la-tierra-debajo-de-la-alfombra/ . 2 The Economic Dimension: A Nation Grown… 17

It is exactly this combination of wealth with the emerging feeling of injustice that infects social psychology beyond class borders, as the multiplying social initiatives stemming from the wealthy classes in cooperation with international aid underscore.44 On the other hand, more people start to claim their piece of the pie through protest and violence, as the crime statistics and, in particular, their perception by the citizens show: In spite of the lowest homicide rates in Latin America, Chileans perceive themselves to be more at risk in their own neighborhoods than do the people of Honduras, murder capital of the region, a U.N. study of November 2013 reveals. The United Nations Development Program’s (UNDP) Citizen Security report—which examined both the region’s crime statistics and perceived danger—found that despite economic growth, Latin America continues to be the most insecure region on the planet. According to the report, Chile has the lowest homicide rate in the region—2 murders per 100,000 people—yet only 7 out of 10 Chilean feel safe in their own neighborhood. In contrast 8 out of 10 Hondurans feel safe in their neighborhoods, which have the highest homicide rates in Latin America, reaching 86.5 murders per 100,000. ‘Honduras and Chile illustrate the difference between real and perceived insecurity,’ the report reads. The report states that a high perceived risk may be related to a lack of trust in the nation’s own security forces. Lucía Dammert, a member of the history faculty in the Universidad de Chile who contributed to the report, believes that in Chile the issue runs deeper. ‘Chile is a country that does not trust the state, the government, the justice system,’ she told The Santiago Times. ‘People in Chile are a lot less trust- ing than in other countries. They’re more defensive, scared than in the rest of Latin America.’ 45 It may not exactly be helpful in this psychological occasion that in November 2014, former Chilean president Ricardo Lagos pointed at a multiplication of drug- related crimes in the nation asking, as a consequence, for the legalization of drugs in order to have less people criminalized: ‘Ending criminal penalties for the consumption of drugs such as marijuana and possibly even cocaine is the best way to curb drug related crime and bring about a reduction of drug use in Chile’, former President Ricardo Lagos said. ‘The process should begin with marijuana […] After one or two years we will see if we dare to legalize cocaine. It starts with a major prevention campaign and with providing nonprison punishment for those who are incarcerated today, depending on the magnitude of their offenses,’ Lagos, who governed Chile from 2000-2006, stated. ‘The only thing that’s clear to me is that there were 10,000 drug arrests per year in Chile in 2002 and 10 years later it’s multiplying by eight, reaching 82,000. Chile needs to grow up’ he said. Lagos described President Michelle Bachelet’s plan to remove marijuana from the category of hard drugs as insufﬁ cient.46

44 United Nations Ofﬁ ce for South-South Cooperation, United Nations Development Programme: Pioneering Chilean Eco-Buildings. In: Southern Innovator. A Magazine Celebrating South-South Innovation, Issue 4/2013, p. 23. 45 M. Yagoub: Despite lowest murder rates, Chileans most insecure in Latin America. UN report on security—perceived and real—ﬁ nds surprising correlation between economic development and crime rates. In: The Santiago Times, November 14th, 2013, http://santiagotimes.cl/ despite-lowest-murder-rate-chileans-insecure-latin-america/ 46 Vida Latina San Diego: Chile Drugs. Former president calls for drug decriminalization in Chile: In. Vida Latin, November 7, 2014, http://www.vidalatinasd.com/news/2014/nov/07/ former-president-calls-for-drug-decriminalization/ . 18 R. Benedikter and K. Siepmann

Many, however, are scared of the consequences, though, and—more importantly— think that the problem is not related to drug-induced crime, but to systemic inequality due to the rich-poor gap and corruption. Many Chileans today seem to believe that it is probable that drug-related crime can be solved in one way or another, but that systemic inequality and corruption cannot. This has serious consequences: The publication emphasizes that the level of insecurity many experience impedes human development, a position held by Dammert. ‘People have begun to shut themselves away,’ she said. ‘They’ve stopped going to public spaces. They distrust their neighbors. This inhib- its communal development. People become more individualistic and less integrated.’ The report sheds light on the surprising correlation between Latin America’s growing economic development and ﬁ nancial stability and rising levels of criminality. In the video that accom- panies the report, the UN Assistant Secretary General and Regional Director for Latin America and the Caribbean of the UNDP, Heraldo Muñoz, highlights the discrepancy that exists between development and security in the area. ‘Despite its promising economic growth in recent years, despite the reduction of poverty and even of inequality, the problem is that Latin America continues to be the most dangerous region in the world,’ he says. According to Dammert, this phenomenon is a result of the inadequate distribution of wealth in South American countries. ‘I would say that it is not a paradox but a consequence, because the economic growth in Latin America has been a completely unequal one,’ Dammert says.47 Consequently, the actual discontent in parts of the Chilean population seems to be caused by their (sometimes deconstructive) daily (perceived) need to resist the given conditions, not by (constructive) hopes of a more positive nation-building for the future. It seems to be rather related to the emotional effects of systemic exclusion from economic growth, and less to the rational and ethical demand for more democracy per se, i.e. in the ideal sense. During the nationwide protests in 2011, the popular saying “Chile is growing, but not developing” sprung up. This sentence has become a widely accepted mantra of societal self-perception even among the wealthier. Moreover, it became a slogan spread all over Latin America to characterize the main structural problem of the continent which persists despite all reform attempts.

Propagation of “Free Market” Ethics and Power Concentration

Why? Because is it perceptible to most who get a regular paycheck that life can be difﬁ cult in current Chile. Ordinary activities, such as shopping or consulting a doctor, can become frustrating experiences due to the price-wage dichotomy. In 2013, Chile not only featured the most expensive educational system, but also the most expensive healthcare system in the world relative to average purchasing power. There is an improbable relationship between wages and prices, not only with regard to luxury, but also to basic goods. In 2013, eight rolls of toilet paper cost up to 4,000

47 Ibid. 2 The Economic Dimension: A Nation Grown… 19

Chilean pesos (circa €6.60/$8.50/£5.60). Other products made of paper are sold in spiralling prices. How is this possible in a country with a big forest industry in the South? Paper is defi nitely not a scarce resource; after all, Chile exports it in great amounts. In fact, paper produced in Chile is often cheaper in foreign countries than in the homeland, most certainly in surrounding Latin America. According to Santiago-based political observers, the reasons for the high prices on the domestic market are de facto monopolies which are rarely challenged by the government. Considering the domestic mono-market in a basic good such as paper, it is no surprise that the CMPC paper empire is doing so well. De facto monopolies, erected under the protection of neoliberal free market ethics, are creating power concentrations that reach out beyond the economy into politics and the public life. Similar practices of neoliberal de facto monopolies are applied to the housing and the food markets. The housing market to date follows the pre-2007 US model of high indebtedness through all-too-generous loans that pursue the twofold goal of banks and credit- givers of making citizens dependent on serving the interests on their loans without being able to pay back the debt, thus delivering a good part of their salaries to the fi nancial sector indefi nitely, if not for a good part of their lives (and without much risk to the banks and lenders); and second of making sure house prices rise continuously, thus creating the illusion that exaggerated prices are positive in the long term, suggesting that they will continue to rise after the purchase and thus constantly increase the value of his or her home.48 The food market follows the laws of the international speculative capital markets, which since 2011 are drifting from derivatives towards food speculation, thus increasing the prices of basic goods such as wheat or corn by up to 100 % between February 2010 and February 2011 alone. The comparison of supermarket prices with those in market halls in Santiago is telling. In the latter, the same products cost up to a third less. For example, a piece of cheese in a supermarket costs ca. 2,000– 3,500 CLP (€3.20–5.70/$4.17–7.44/£2.72–4.85), which is a third more than the cost in an average market hall. Visiting a market hall in Santiago opens up an observatory of social segregation. Usually, the poor are not seen in supermarkets: The high prices are beyond their means and force them to do their shopping in the market halls. It is a recent development that these sometimes shabby market halls are seeing more middle class people. Buying in market halls is an option to prevent becoming dependent on credit to survive for many middle-class citizens.

48 Cf. the detailed analysis of the basic mechanisms applied by the neoliberal fi nancial system in: R. Benedikter: Social Banking and Social Finance: Answers to the Economic Crisis, Springer Briefs in Business, New York 2011; and R. Benedikter: European Answers to the Financial Crisis: Social Banking and Social Finance. In: The Stanford Program on International and Cross-Cultural Education SPICE Digest Series. Edited by the Freeman Spogli Institute for International Studies, Stanford University, Spring Edition, Stanford University Press 2011, http://spice.fsi.stanford.edu/ sites/default/fi les/social_banking.pdf, reprinted on the websites of The Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE), http://sprie.gsb.stanford.edu/publications/ european_answers_to_the_fi nancial_crisis_social_banking_and_social_fi nance/ . 20 R. Benedikter and K. Siepmann

Both developments in the housing and food markets are as much expression of the successful ethics of free market ideology as their caricature. The gap between the theory and reality of the free market could hardly be more accentuated than in current Chile. Almost all sectors have been accused by the press of collusion and monopolistic practices which prevent the emergence of new domestic economic actors and small- and medium-sized companies. Not surprisingly, the concentration of power by economic means is defended by those who promote the free market out of a neoliberal vision. One of the most talented promoters of the narrative of a fair, competence-based, and rational free market in Chile is Horst Paulmann Kemna. Paulmann immigrated to Chile after World War II and started to run a retail empire together with his brother. Nowadays Paulmann, 78, is a self-made billionaire, the owner of the majority of supermarkets, malls, and retail stores in Chile (Cencosud S.A.), and gives work to more than 27,000 people (2011). He is a pluri-awarded public fi gure of noticeable political infl uence, and, with a personal fortune of US$9,300 million, the third richest person in Chile.49 As a result of the intertwinement between economics, free-market ethics, politics, and the heritage of the (to some extent elitist and for a long time authoritarian) cultural and social history, power and wealth in Chile remain closely interrelated. They are dominated by less than a dozen families such as the Mattes and Paulmanns, their business partners, dependents, and allies, both domestic and international. In such a framework, the offi cial motto of Chile: “By right or might” (Por la razón o la fuerza ) has acquired its own meaning in the view of many of its citizens. It is mirrored by the Gini index, where Chile in 2009 was ranked fi rst of all OECD countries in inequality and income disparity with a coeffi cient of 0.52. 50

What Is the “Real” Base of Chile’s Economic Growth?

To understand the mechanisms in play, it is crucial to take a look at what was (and still is) the real base of Chile’s economic growth. First there is the export of natural resources: copper, seafood, and agricultural products such as wood and wine. It brings money in. But the second impulse of growth is domestic: the commercialization of the lives of Chilean people, which in many ways follows the US model, redistributing money within the country. In recent years, this second generator of economic drive has in some ways taken over the lead role in spurring economic success. Taking the metro in Santiago on a fall day in 2014, one immediately understands what the biggest businesses in today’s Chile are. Advertisements in the underground trains are dominated by two main business categories: ﬁ rst, higher education, with

49 C. Leal: Forbes actualiza lista de las 5 personas más adineradas de Chile, loc cit. 50 The World Bank: Gini Index: Chile, http://data.worldbank.org/indicator/SI.POV.GINI and http:// data.worldbank.org/country/chile . 2 The Economic Dimension: A Nation Grown… 21 optimistic promises of a safe and successful future; second , health services—both always advertised with the corresponding credit options by the fi nance industry tailored specifi cally to the respective fi elds and options. Although the omnipresence of these ads is hard to overlook, until recently people also heard the same advertisements from the metro’s speakers. Education and healthcare are indeed the business sectors where the privatization of current Chilean society and public life is most evident. Interestingly, Chilean law formally prohibits profi t making in the educational sector. Nevertheless, the sector has become one of the principal domestic industries of the country, and the most heavily intertwined with the fi nancial lending industry—not least because most of the students need to take loans to afford the fees. The strong reliance of the fi nancial industry on student loans is no surprise in face of the fact that Chile today has the largest gap between the average tuition fee and the average income per person within all OECD countries. As a result, loans are so badly needed that they can be issued with such high interest rates that the students fi nally pay twice or threefold the costs of their studies, if university fees and bank debt services are combined. Due to indebtedness, most graduates have to repay their loans over a timeframe of 20–30 years. In addition, there is a disproportion of projected graduate income and the average graduate’s debt, such that in many cases it is almost impossible to fully pay back the loan over an average working biography. Today, in Chile the average debt of university graduates represents 174 % of the expected annual income,51 in comparison to the United States where it is “only” 57 %, and to Europe where it is usually below 25 %, with the exception of the UK where after the reforms by the conservative- liberal government of David Cameron, it is expected to reach 40 %. Observers ironize that when other countries feature a problematic “military-industrial complex”, contemporary Chile’s rare characteristic seems to be a “fi nancial-academic complex” that is one building stone of the country’s rising discontent. The shift of the center of gravity of growth from foreign to domestic profi ts in recent years has created a situation where parts of the overall growth are unproduc- tive to the majority of the citizens. Many feel that national growth occurs on their shoulders and at their expense for the benefi t of too few. Or as Chilean sociologist Alberto Mayol states, If someone starts to settle the bill for something that was cheap or even free before (which happened with the educational and the health system), she or he will claim to create growth and wealth. Or to overstate the case a bit: If people had to start to pay for breathing air, the GDP would also grow, but people would become poorer. 52

51 D. Salinas and P. Fraser, Pennsylvania State University: Educational Opportunity and Contentious Politics: The 2011 Chilean Student Movement. In: Berkeley Review of Education, Volume 3, No. 1, pp. 17–47, here: p. 20, http://escholarship.org/uc/item/60g9j416#page-1 . 52 “Obviamente se empieza a cobrar por algo que no se cobraba; por tanto generas mucho desarrollo. Si ahora tú empiezas a cobrar por el aire, vas a tener mucho crecimiento del PIB, pero la gente va a ser más pobre.” A. Carmona y M. Macari: Alberto Mayol y su libro sobre la crisis del sistema político y económico: “El modelo chileno se acabó”. In: Elmostrador.país, 25 de Junio de 2012, http://www.elmostrador.cl/noticias/pais/2012/06/25/el-modelo-chileno-se-acabo/ . 22 R. Benedikter and K. Siepmann

Mayol is not the only one uneasy with today’s Chile’s educational system and its intertwinement with the fi nance industry. What the student movement of 2011 demanded under the—somewhat reductionist and inadequate—motto “No al lucro” (no to profi t) was a free, public, and fair education of good quality. Although Chile features the most expensive educational system worldwide as related to pro-capita income, Chilean students—according to data from UNESCO—are on average unexceptionally educated by international comparison.53 It was a worrying signal of Chile’s social situation that the students were applauded by the population at large: 70–80 % of Chileans continuously approved the student demands between August 2011 and September 2012. 54 This is because many Chilean citizens understand “No al lucro” in a more structural way as “No to power abuse by economic and fi nancial means”.55

Omnipresence of the Credit Business

But the educational sector is just one, although probably the most accentuated, example of the omnipresence of the credit business that penetrates all facets of contemporary Chilean life. Retail stores, supermarkets, and pharmacies stopped making money primarily out of the quality of their products, the numbers sold, and of the difference between the purchase and the retail price a long time ago. Most revenue in these sectors is now generated by ﬁ nancial products, which are sold as additional features with the products. It has, for example, become normal practice that when one buys medicine, the pharmacist asks if the customer wants to buy the package of aspirin in one, two, or three instalments. Credit is offered, if not psychologically imposed on people at the smallest level of purchase and trade, and the new target groups are particularly people with a medium or lower socio-economic background. As banks well know, people from these classes have problems reaching the end of the month with their regular income. Thus, they promote so-called “créditos de consumo”, or consumer credits, which are usually given without any securities needed. They are sold as a “service” to those who need them, and as an apparently

53 Cf. about the backgrounds R. Reich: The MECESUP program in Chile. 15 Years Supporting Higher Education Quality Improvement. In: ReVista. Harvard Review of Latin America, Fall 2012, http://revista.drclas.harvard.edu/publications/revistaonline/fall-2012/mecesup-program- chile ; and K. Rolwing and N. Clark: Higher Education in Chile. In: World Education News & Reviews (WENR), December 6, 2013, http://wenr.wes.org/2013/12/introduction-to-the-higher- education-system-of-chile/ . 54 Adimark: Encuesta de opinión pública—Evaluación gestión de gobierno, septiembre 2012, http://www.adimark.cl/es/estudios/index.asp?id=163 . 55 A. Carmona y M. Macari: Alberto Mayol y su segundo libro, “No al lucro”: “Hoy la política chilena tiene dos actores relevantes: los movimientos sociales y la UDI”. In: Elmostrador.país, 13 de Julio de 2012, http://www.elmostrador.cl/2012/13/07/hoy-la-politica-chilena-tiene-dos- actores-relevantes-los-movimientos-sociales-y-la-udi/ . 2 The Economic Dimension: A Nation Grown… 23 generous sign of solidarity between the fi nancial industry and the poorer parts of the population. The truth, however, is that they make people dependent, and ultimately poorer. In this situation the irony in Chile’s public landscape are larger-than-life advertisements such as Es rico dejar de ser pobre (It is beautiful to stop being poor, literally: It is rich to stop being poor) by the Banigualdad , the Chile Foundation Bank of Equality, which claims to provide micro-credits to the most disadvantaged.56 But instead of creating more equality, the real dynamic of recent years was an increasing indebtedness of the poorest part of the population reaching systemic levels, which led to the collapse of whole social milieus. As a consequence, many observers today diagnose a “structural confi scation” of “real life” in Chile by the fi nancial industry, since the majority of the poor mainly work to pay the banks. In recent years, an over-proportional number of them seem to be mentally burdened to the point of illness because of the fear of being sooner or later unable to serve the debts. In 2012, 41 % of the middle class and 50 % of the lower classes stated in offi cial polls: “I frequently feel depressed because of the debts we have in our household”.57

The Forest Industry: A National Good?

As an effect, various local, regional, indigenous, and environmental movements are on the rise. Their main motto is similar to that of the student movement: “No profi t” or “No power abuse”, respectively. There is a link between many of those movements and the multi-billion dollar Chilean forest companies, who make up a good part of the resource sector. CMPC, Arauco S.A., and MASISA, the big enterprises in the Chilean forest sector, claim that their forest plantations generate a broad economic, social, and environmental outreach that creates fortune for the country and does not threaten the primeval forest.58 Indeed, most of these claims are correct: the forest industry is offi cially among the most important in generating the growth of the Chilean GDP, after fi nancial products (!), mining, and gastronomy.59 But as balance sheets and investment lists show, the generated wealth of the plantations remains widely in the hands of the owners of those companies. The communities where the plantations are located remain on average among the poorest and most underdeveloped in the country and are rarely benefi ciaries of the industry, at least in the view of the majority of their citizens. The informal network constituted by CMPC, Arauco S.A., and MASISA

56 Fundación Banigualdad: http://www.banigualdad.cl/ . 57 Universidad Católica y Adimark GfK: Encuesta Nacional Bicentenario 2012, loc cit., p. 109: “Con frecuencia me siento agobiado por las deudas que tenemos en la casa”. 58 Empresas CMPC S.A.: Sustainable Development Report 2012, http://www.empresascmpc.cl/ wp-content/uploads/2013/10/Reporte-de-Desarrollo-Sostenible-2012-EN.pdf . 59 Instituto Forestal INFOR (Forestry Institute Chile): Anuario Forestal 2013, Boletín Estadístico No. 140, pp. 7, 13, http://wef.infor.cl/publicaciones/anuario/2013/Anuario2013.pdf . 24 R. Benedikter and K. Siepmann led to the bankruptcy of many small- and medium-sized actors in the fi eld, allowing the “big actors” to play a decisive role in defi ning the price of territory, raw material, labour costs, and the end product.60 Interestingly, at the same time the forest industry remains highly subsidized by the Chilean government—offi cially to favour medium-sized and small producers. Nevertheless, big companies receive most of the subsidies: from 1974 to 1998 94 % of the subsidies were given to the four biggest companies in the fi eld, and a still high 62 % from 1998 to 2010.61

Impact on Indigenous Territories

What Is the Social Outreach of These Policies?

Most plantations of Forestal MININCO,62 a subsidiary ﬁ rm of CMPC,63 are located in the remote Southern regions of the country, mainly in Bío Bío, Los Lagos, and La Araucania, which are part of the indigenous territory of the Mapuche. In this area most of the recent indigenous protests against and violent conﬂ icts with local and national governments took place. The opposition of the Mapuche is, according to their own statements, not intended as ethnic separatism, and it is not directed against the Chilean society as a whole, but explicitly against the powerful who usurped the territory, destroyed the ecosystem and pushed the local population into poverty. 64 Whether this statement is objectively correct or not, the fact is: Due to the monocultures of pine and eucalyptus planted for the forest industry, land for agriculture, and subsequently the basis of life for many Mapuche, is becoming scarce in some regions. The plantations also trigger another problem not unfamiliar to other global zones dominated by monocultures: water shortage. Pine and eucalyptus are exotic plants imported to Chile that consume large amounts of water, which results in the slow drying of the ground. According to national statistics of 2012, the Mapuche earn

60 A. Gonzales: El milagro forestal Chileno? In: Biobiochile.cl, 11 diciembre 2012, http://www. biobiochile.cl/2012/12/11/el-milagro-forestal-chileno.shtml . 61 Ibid. 62 Forestal MININCO: http://www.forestalmininco.cl/ . 63 CMPC Celulosa: http://www.cmpccelulosa.cl/CMPCCELULOSA/ . 64 J. Donoso Jiménez: Violencia política en el sur de Chile. La Alianza Territorial Mapuche Pü Löf Xawün y el Estado chileno en el gobierno de Michelle Bachelet, Santiago de Chile 2011, p. 318, http://www.flacso.edu.mx/biblioiberoamericana/TEXT/DOCCS_VII_promocion_2008-2011/ Donoso_J.pdf . 2 The Economic Dimension: A Nation Grown… 25 wages that are, in the majority, below the minimum wage, and thus have such a low quality of life that it results in 10 years of life expectancy less than in the richer communities of the country.65 At the same time, the big players in the forestry industry (with the help of their differentiated investments in other ﬁ elds) earn record proﬁ ts—also beyond the industry as such. In 2008, 49 % of the national GDP was allegedly concentrated within or in some way related to four entrepreneurial families active in the industry led by Eliodoro Matte, Andrónico Luksic, Anacleto Angelini, and the former president Sebastián Piñera.66

“We Are the Owners of Chile”

Correspondingly, the great-grandfather of Eliodoro Matte, Eduardo Matte Pérez, allegedly stated more than a century ago: We are the owners of Chile, the owners of capital and soil; the rest are masses that have to be inﬂ uenced and can be bought; these masses don’t have any real weight, neither in public opinion nor in prestige.67 Although these are quotes reported by—partly politically declared—leftist sources and as such not fully conﬁ rmable from a neutral standpoint, considering some of the practices in place particularly in the Mapuche areas, it seems to many, particularly to younger Chileans, as if such or similar thoughts have remained strong throughout the years. Against this background, there can be no doubt that the Chilean government’s double goal is as rational and progressive as it is almost impossible to achieve: on the one hand trying to protect the rights of indigenous people, on the other hand simultaneously strengthening the markets. When it came to strategic decisions, however, in recent years the government placed the interests of the markets—or rather the growth of the overall GDP—above the interests of local and regional indigenous people more than once.

65 A. Mayol: El derrumbe del modelo: La crisis de la economía de mercado en el Chile contemporáneo, LOM ediciones, Santiago de Chile 2012, p. 40. 66 Globedia.com: ¿De la crisis educacional a la crisis sistémica?, loc cit. 67 “Los dueños de Chile somos nosotros, los dueños del capital y del suelo; lo demás es masa inﬂ u- enciable y vendible; ella no pesa ni como opinión ni como prestigio”. Quoted according to E. Carmona: Los dueños de Chile. Revista Punto Final 01/2003, http://www.archivochile.com/ Poder_Dominante/grem_empre/PDgremios0001.pdf . 26 R. Benedikter and K. Siepmann

“Nature Based” Capitalism and the Student Movement Since 2011

What Were the Effects?

On 22 April, 2013, thousands of people assembled on the streets of various cities of Chile for the fi rst nationwide water-protest, demanding the renationalization and public recuperation of water for the sake of the public good. The background was that as one effect of neoliberal ethics and policies, Chilean water today is completely in private hands. Consequentially, most environmental protests have pointed to just a small number of actors: the “big companies” that exploit the natural resources of the country leaving certain areas in increasing shortage of water. This has occasionally led to situations where people were no longer self-suffi cient (the harvest dried out) and could no longer afford to participate in consumption on a broader level. Viewed globally, that means that while in macro-economic terms the forest industry produced very appreciable results for the nation, the benefi ts were not distributed equally. This seems not to be primarily the fault of specifi c people, but rather a shortfall of the system and its historically inbuilt habits. The benefi ciary of growth seems to have been a rather small group of investors and entrepreneurs, while the costs were paid by Chilean society, especially the farmers, the small- and medium-sized fi rms, the indigenous communities, and the environment. No wonder that—rightly or wrongly, and intended by the dominating economic classes or not—for many Chileans the “real” base of Chile’s GDP growth remains domestic exploitation: Exploitation of natural resources that harms the environment and of people (through banks, education, health, housing) that can lead to social and psychological problems due to economic pressure. As a result, social discontent in Chile today is a widespread emotional fact—be it justifi ed or unjustifi ed, a matter of reality or “only” of psychology. In the face of this panorama, the student movement of 2011 probably, and without judging the problems and shortfalls of its inherent—partly radical—leftist ideological stance, served as an expression and amplifi er of concretely existing social discontent. By forging alliances between many different sections of the population who consider themselves disadvantaged, it integrated discontent with single features of Chile’s system and developed it towards a general analysis of the inbuilt fallacies of an otherwise successful economic order. The leftist student protest movement thus—and maybe only thus—was able to become one of the most dynamic social actors in Chile of the last 20 years, serving as a hub to transform partial into general issues and concerns.68

68 Globedia.com: ¿De la crisis educacional a la crisis sistémica?, loc cit. 2 The Economic Dimension: A Nation Grown… 27

Conclusion: Towards a Pondered Discourse on Development, Distribution, and Participation—Elements for Reform

What can today’s socio-economic patterns in Chile teach us—beyond the borders of the social classes and ideological struggles, and from a viewpoint aiming to integrate the interests of all actors involved? First , the concrete impact of the protest movement of 2011 on political and social change to date remains limited; and it fell short of its own ambitions on more than one occasion. As the movement has been apparently in a state of de-mobilization after the November–December 2013 general elections, its further potential impact will depend on the capacities of its intellectual nucleus to challenge the existing order in pondered, rational, and most importantly non-radical ways, as well as of its capacity to organize and distribute “alternative” information. Second, in “highly fragmented” societies such as today’s Chile, inequality tends to be over-proportionally perceived.69 This is due to the survival of (in essence out- dated) Marxist traditions of thought in the public sphere and their impact on politics and economics. Some intellectuals remain prisoners of a class ideology that doesn’t recognize individual achievements and overvalues equality at the expense of freedom—a problem that dominates intellectual debate in many Southern countries, including some current Southern European crisis nations, and to a certain extent also certain environments of the Southern states of America. Third , on the other hand, inequality does seem to be indeed a growing concrete reality in Chile. It is creating effects on two levels. On the collective level, it leads to an erosion of solidarity and to a crisis of communitarianism in general. 70 On the individual level, it results in the impoverishment of social idealism, the decrease of the “postmaterialist” segments of the population,71 and in outbreaks of frustration. In the context of such a society, the mobilization of 2011 in retrospect could have been the ﬁ rst step towards a more integrative and balanced project of Chilean society—although probably mainly in the long-term, not yet in immediate trajectories. The unaltered continuation of the present state of affairs is unlikely to be the solution—but neither will it be the return of the radical left, which has been proven to trigger negative effects throughout South America, as the legacy, for example, of Hugo Chavez in Venezuela teaches.

69 Cf. M. Steger: The Rise of the Global Imaginary. Political Ideologies from the French Revolution to the Global War on Terror. New York: Oxford University Press 2008. 70 G. Cumsille y M. A. Garretón, Universidad de Chile: Percepciones culturales de la desigualdad, Ediciones MIDEPLAN, Santiago de Chile 2000, p. 7. 71 R. Inglehart: Changing Values among Western Publics from 1970 to 2006. In: West European Politics 31/2008, No. 1–2, pp. 130–146. Cf. R. Benedikter (ed.): Postmaterialismus book series, Vol. 1–7, Passagen Verlag Vienna 2001–2005, http://www.passagen.at/cms/index.php?id=80& autor=688&L=2 . 28 R. Benedikter and K. Siepmann

Fourth, and drawing a tentative conclusion, one aspect may be taken as granted: Although Chile has been praised for its economic performance and its democratic institutions, the reality of its system shows a more differentiated picture. Studies of 2012 show that only 18 % of its citizens consider Chile’s democracy to be working well,72 and only 3 % trust political parties.73 These are without doubt numbers of crisis—certainly in an internationally comparative view, a bit less in a geopolitically restricted or regional perspective. Although the economic system implemented in Chile has not helped the rise of a particularly participatory political culture, people are starting to become interested in politics again—not least because of new faces springing up in the public sphere. In this regard, new internet-based social networks play an important role in the evolution of a new, more pluralistic and on some aspects more anarchic political culture, informed by “grassroots” elements. Overall, there are pros and cons in the given constellation that need to be care- fully pondered. Reducing the current situation to prophecies of doom would certainly not correspond to the facts. Chile has made noticeable advances compared to other countries in the South American context. The current economic system brought short- to medium-term advantages for both rich and poor alike. In recent decades, Chile has reduced extreme poverty in a remarkable way by giving micro- credits on a broad and relatively undifferentiated scale. This created workplaces, and not least thanks to the credit system, people with a lower social background had access to money, and thus in many cases to higher education—which in previous decades was mostly restricted to the elite. The growth of private schools and universities not only contributed to an enrichment of the (already rich) fi nanciers of these institutions, but also played a key role in creating new conditions for a broader elite, for better vertical and social mobility, and indirectly for a peaceful political integration of the classes. In the long-term view, however, the overall arrangement of Chile’s current socio- political pattern still seems to offer more advantages for the rich than the poor. More importantly, it will be diffi cult to erase the widespread socio-psychological sense of injustice without structural reforms. For a more pondered development, it will not suffi ce to redistribute parts of the fi nancial resources that are stored within the top levels of society. Rather, crucial systemic features should be recalibrated towards more equal access, participation, and fairness. That may require a new, more balanced and less propagandistic public discourse from all sides—left and right alike— about the pros and cons of liberalization, neoliberalism, redistribution, the ethics of free markets as applied internationally and domestically, and the best way to read- just the interplay between economics, fi nance, and politics in the given Chilean context.

72 Encuestas CEP: Estudio Nacional de Opinión Pública Proyecto Auditoría a la Democracia 2012, 15 de enero de 2013, p. 14, http://www.cepchile.cl/1_5211/doc/estudio_nacional_de_opinion_ publica_proyecto_auditoria_a_la_democracia_2012.html#.UT_gzrsrxfc . 73 Universidad Católica y Adimark GfK: Encuesta Nacional Bicentenario 2012, loc cit., p. 39. 2 The Economic Dimension: A Nation Grown… 29

Alternative Discourses in the Political Landscape Since the Electoral Campaign for the Elections of 2013: “Political Humanism” as a “Third Way Strategy” Between the Left and the Right?

What Are the Perspectives?

In the building stages towards the presidential and general elections of 17 November and 15 December, 2013, won by the leftist coalition under Michelle Bachelet, candidates appeared in the nationwide TV-political talk show Tolerancia Cero (Zero Tolerance) and shared their views on the future. On 27 April 2013, the guest was a “non-traditional”—and as such relatively isolated—candidate of leftist inclinations who claimed not to represent a traditional leftist trajectory, but rather a “humanistic” “third way” between the left and the right: Marcel Claude.74 “Third way movements”75 have a long tradition in Southern America, although, in contrast to their claims, they have not always been neutral between left and right, but in most cases despite their humanist pretensions were rather inclined to leftist viewpoints and perspectives. Claude was an independent presidential candidate (candidato independiente ) of the small party Partido Humanista (Humanistic Party), which didn’t have any signiﬁ cant inﬂ uence on the vote. Claude hadn’t appeared in national polls before the elections and had been poorly publicly present; as a consequence, he not surprisingly lost the elections in a drastic way with only 2.81 % of the votes.76 What nevertheless makes his candidacy interesting from a post-electoral viewpoint is that according to polls before the elections, 7 out of 12 million Chileans (60 %) said they didn’t want to vote either for the Alianza (the then governing conservative party coalition of Sebastián Piñera, president from 2010 to 2014), or for the Concertación (the alliance of the center-left parties under Michelle Bachelet who won). According to polls, overproportionally many citizens seemed inclined to vote for a “third way”, new and independent candidates like Claude. Chile seemed to want political change, and many declared they wanted to get out of the left-right box. Many said they were convinced that in the end both the left and the right legitimated and thus eventually sustained each other, ensuring that the system as such didn’t change.

74 Tolerancio Cero: Marcel Claude En Tolerancia Cero. El candidato del Partido Humanista estuvo el domingo 27 de abril de 2013 invitado a nuestro programa, 30.04.2013, https://www.youtube. com/watch?v=QS5wBUD_lEs . 75 R. Benedikter: Third Way Movements. In: M. Juergensmeyer and H. K. Anheier (ed.s): The SAGE Encyclopaedia of Global Studies. 4 Volumes, SAGE Publishers London and Thousand Oaks 2012, Volume 4, pp. 1647–1650. 76 Acta de Declaración del Tribunal Califi cador de Elecciones Pronunciada con Motivo de la Primera Votación Desarrollada en el País en el Día 17 de Noviembre de 2013 Para Elegir Presidente de la República. In: Diario ofi cial de la Republica de Chile, 3 de diciembre de 2013, http://www. diarioofi cial.interior.gob.cl/media/2013/12/03/11-large.jpg . 30 R. Benedikter and K. Siepmann

Marcel Claude is an economist of the Universidad de Chile who was involved with the student movement from its beginning, mainly as an advisor. For the previous 20 years, despite not having held political offi ce, he had worked with various social movements, labour unions, and students: groups he wanted to integrate into the “offi cial” political change. Although disputed by some students themselves, according to his statements, “the students” urged him to run because of his reform program based on strict economic rationalities. The most important point of Claude’s program was the transformation of the Chilean economy from what he called “a niche of businesses” (nicho de negocios) into a “constitutional system” “under the rule of law” by guaranteeing equal access to education, health, housing, and pensions to all parts of the population. If he would have entered the Moneda (Chile’s presidential palace), Claude had vowed to limit the power of the most infl u- ential families through the nationalization of the copper mines and to provide free education and a public health system both co-fi nanced through massively increased taxation of the richest. Although in the eyes of the majority of citizens these moves seemed to be too radical, dangerously close to socialist—or even communist—ideas which have proven fatal for Southern America both in the past and in the present, Claude denied having any sympathies for leftist policies in the traditional sense, highlighting instead his “humanistic” impulse: The change we need in present Chile is a change towards human rights, broadly understood. I agree that such a transition could be called radical by some. But Chile, in essence, is not governed by the rule of law today. Most issues are, in fact, purely business options.77 According to Claude, Chile is at a turning point of its recent history. The social situation is worse than the media represent it. Depression, violence, and discontent are in the air for years, but they couldn’t be expressed appropriately until 2011. The social movements of 2011 (i.e., the student protest movement and its effects and allies, addition by the authors) were the most important political innovation in the last 20 years. With the student movement, Chileans were able to eventually understand what their problems are.78 Although some of Claude’s statements sounded far less balanced and integrative than he claimed, and became much more socialist in their outlook as he tried to sell them to the voters, in 2013 his candidacy was one telling symptom among many of a Chilean society in transition. Without doubt, Claude was one expression of a new awareness of the country’s situation, pointing towards the need for reforms that had been taking a grip on larger parts of the population since 2011, in particular in the 2013 general elections. There seems indeed to be a need for a “third way” integrating the equally legitimate positions of both “the left” and “the right” in Chile— for the sake of the nation as a whole.

77 Tolerancio Cero: Marcel Claude En Tolerancia Cero, loc cit. 78 Ibid. 2 The Economic Dimension: A Nation Grown… 31

Chile’s Desirable “Grand Strategy” for the Coming Years: Integrate Public and Private Fields Through Socio-Economic Differentiation

The classical developmental theory coined by international institutions aiming to “help” the “Third World” (a strange concept from its very beginning) since the 1970s propagated two main typological models: – First, “help” “Third World nations” by “alignment” to the West. That meant industrialization by means of low wages and high investor profi ts, export orientation, and attraction of the international fi nancial sector through low taxation and deregulation of the labour market. The hope was to create an upward spiral through foreign investments for the benefi t of the elite in the fi rst phase, followed by wealth for greater numbers in a second, and for all in a third phase through mass employment, growing governmental income, a resulting wider and wider spread of wealth, tax decreases, and growing consumption, leading to increased tax income for the government, to be invested in education for all and know-how, leading to a higher level of production and technological advances subsequently resulting in more internationally competitive products, and so forth. – Second (and in opposition to this model), “help” through sustaining a national and regional “own way” development of independent nature. Such a way had to be achieved through local empowerment and participation, a focus on democratization and the resulting increase in individual productivity, the strengthening of women’s and indigenous rights, domestic production for domestic consumption, priority given to regional, local, and indigenous economic circuits as well as government-directed redistribution of wealth; but also through the partial disap- propriation of foreign owners and investors, for example through the nationalization not of goods, but of rights previously reserved for foreign investors, the rise of taxes for the richest, and the general accentuation of progressive taxation. In the subsequent process, both options manifested as many pros and cons; and both proved to be incomplete, incapable of facing the reality of “post-9/11” complexity in sustainable ways. Without doubt, the Chile of the 2000s has been an exemplary playground for the fi rst approach, i.e. the more traditional one: Imitation of the West by integration into the global fi nancial system; furtherance of neoliberalism, interpreted as liberalization in as many fi elds of action as possible and without much local or regional discernment; non-differentiation between core strategic fi elds and side strategic fi elds of liberalization; separation of politics and economics for the sake of the latter; withdrawal of the state. Among the important strategic fi elds, in recent years the educational sector exceeded other sectors in importance in pursuing these policies and establishing the current Chilean constellation. It can be expected that it will remain equally important for the future. Interestingly, the US, in many ways the model for the US-educated 32 R. Benedikter and K. Siepmann

Chilean elite, currently recognizes the outstanding importance of “declining schools that pose a security threat” due to over-liberalization and lack of government spending, and that failing schools undermine economic growth, competitiveness, social cohesion and the ability to fi ll positions in institutions vital to national security,79 as proven by the analysis of former secretary of state Condoleezza Rice. If this is the case, then the view of how to position the educational sector within the greater economic, fi nancial, and societal context of Chile should be reexamined too. No longer should it be regarded mainly as business, but as a public core fi eld for the greater success of society in the long-term perspective. Overall, Chile stands before the challenge of discerning strategic fi elds where private business should be separated from fi elds of public interest; and the educational sector should be assigned to the latter. Private and public fi elds need a more differentiated approach. They should not be treated as one and the same, but should be integrated through interrelation. In this sense, the fi rst move towards greater social inclusion and justice could be the transformation of the educational sector towards broader access creating a partial de-economization, i.e. the progression of the “fi nancial-academic complex” through political agreement between public and private.

Outlook: Chile After the End of the “Third World”— Which direction: USA, Europe, or China?

Summing up, Chile—until the start of the 1990s (under dictator Augusto Pinochet) still considered in some ways a “third world” country—has since impressively succeeded in becoming a fully functional part of the Western capitalistic system. But it did so in ways that partly missed the “social market economy” 80 aspect. That was understandable as long as the division between ﬁ rst, second, and third worlds pre- vented closer scrutiny of macro-economic and societal developmental trends by international investors, rating agencies, and other transnational institutions. But what will happen after the much discussed “end of the third world”,81 currently close to fulﬁ lment as the continuous rise of Africa and the BRIC-nations

79 B. Donald: Stanford’s Rice says declining schools pose a national security threat. In: Stanford Report, April 5, 2013, http://news.stanford.edu/news/2013/April/rice-declining-schools-040513. html . 80 C. L. Glossner and D. Gregosz (ed.s): 60 Years of Social Market Economy. Formation, Development and Perspectives of a Peacemaking Formula. Konrad-Adenauer-Stiftung Berlin, June 30, 2010, http://www.kas.de/wf/en/33.20040/ . 81 R. B. Zoellick: The End of the Third World? Modernizing Multilateralism for a Multipolar World. In: The World Bank, April 14, 2010, http://web.worldbank.org/WBSITE/EXTERNAL/ NEWS/0,,contentMDK:22541126~pagePK:34370~piPK:42770~theSitePK:4607,00.html . 2 The Economic Dimension: A Nation Grown… 33 seems to show?82 Will Chile shift towards a closer partnership with the BRIC- alliance, which is becoming a serious global force? Will it become a member of a Latin American coalition around the new regional lead power Brazil, which, however, features widely different, if not incompatible problems? Or will it simply stand alone in South America within the concept of “connected autonomy” like Switzerland in the Eurozone as the “Switzerland of the global South”, 83 while remaining faithful to the West and its global ﬁ nancial system? In other words: Will Chile be forced by shifting balances and the new multipolar order to endeavour an intermediate course between its still active European ties, 84 the USA, which continue in many ways to serve as a role model, and the rising giant China, which is coming closer every day with Chinese investors manifesting special interest in Chile’s natural resources and a good part of the Chilean “extraction industry” already dependent on the rising Asian giant85 ? Or might Chile’s future, unexpected by many, lie in the re-appropriation of its to some extent forgotten European socio-economic foundations, thus actively developing towards an “eco- social market democracy”86 ? In March 2014, the British minister for Latin America announced the plan of “strengthening commercial ties, scientiﬁ c innovation and progress, sustainable growth, and education” with and in Chile during the years to come.87 A free trade agreement with the US exists since 2004, 88 and the cooperation with China is on a strong expansion course for years, particularly in the mining and resource sector, making China Chile’s biggest trading partner currently.89

82 H. James: The Rise of the BRICS and the new Logics in International Politics. In: The International Economy, Summer 2008, p. 41, http://www.international-economy.com/TIE_Su08_ James.pdf . 83 R. Benedikter and K. Siepmann: Chile: What about the Switzerland of the South? The Washington Consensus Fails in Chile. In: Challenge: The Magazine of Economic Affairs, Volume 56, Number 4, September–October 2013, M. E. Sharp Publishers New York, pp. 5–30, http://www.metapress. com/content/n0563h71w6tuw538/ . 84 Cf. the excellent socio-historical introduction in Latin America’s basic characteristics and structural problems in F. Niess: At the beginning was Columbus. Latin America from 1492 until today [Am Anfang war Columbus. Lateinamerika 1492 bis heute], Piper Verlag, München und Zürich 1991. 85 R. Benedikter and V. Nowotny: China’s Road Ahead: Problems, Questions, Perspectives, Springer New York 2014, http://link.springer.com/book/10.1007 %2 F978-1-4614-9363-1 . 86 Konrad Adenauer Foundation: Social Market Economy, http://www.kas.de/wf/en/71.9822/ . 87 E. Vernon: British Minister for Latin America Attends Presidential Inauguration. Minister Hugo Swire is in Chile today and will attend the Presidential inauguration as well as participating in activities to promote cooperation in the sectors of commerce, science and innovation, sustainable growth and education. In: Ilovechile.cl, March 11, 2014, http://www.ilovechile.cl/2014/03/11/ british-minister-latin-america-attends-presidential-inauguration/104981 . 88 Ofﬁ ce of the United States Trade Representative: Chile Free Trade Agreement, http://www.ustr. gov/trade-agreements/free-trade-agreements/chile-fta . 89 P. Rey Mallén: Trade Between Chile And China Grew 22 Percent In 7 Years As China Became Chile’s Biggest Trading Partner. In: International Business Times, September 06, 2013, http:// www.ibtimes.com/trade-between-chile-china-grew-22-percent-7-years-china-became-chiles- biggest-trading-partner . 34 R. Benedikter and K. Siepmann

Overall, Chile is connecting, and it is globalizing fast, faster certainly than most countries of its geopolitical region, and faster probably than most other countries of the OECD and in the democratic hemisphere. That is what the OECD itself underscores in its offi cial “Chile” section, containing country studies, economic fore- casts, data collections, and working papers on the nation’s critical policy issues.90 But with stronger economic and political ties inevitably come socio-political inclinations and choices. Europe, the United States, and China all present different models for Chile, and the closer the respective relations will develop, the more Chile’s own socio-economic model will be infl uenced. Irrespective of the option taken during the second presidential term of Michelle Bachelet 2014–2018, the implications for Chile’s domestic political alliances and foreign economic treaties as well as the effects on its surrounding geopolitical habitat will be multiple. Economic mechanisms will continue to be decisive for internationally positioning the nation politically and socially in the coming years—probably once again more than traditional political mechanisms such as diplomacy and foreign politics per se . Undoubtedly, despite Chile’s success some problems will remain at the forefront. One main problem continues to be the relative isolation of the country among its neighbours due to complex historical facts. In many ways, Chile today is indeed the Switzerland of South America. As such, like its remote (though improbable) European sibling, it will have to balance the interests of its economy with the interests of the region, including monetary agreements, closer fi nancial ties, joint foreign policy strategies, and measures to increase international competitiveness. More importantly, Chile will have to integrate broader than currently involved sections of the population in economic and socio-political decision-making, and to broaden the access of more of its citizens to national growth. This will be the case if the nation wants to keep its—well-deserved—international reputation, if it wants to avoid further social and ideological polarization, and if it aspires to strengthen and further develop its role as a model society in the global South. It will require a new discourse of domestic integration, legitimated by all classes of politics, economy, culture, and society. This dialogue will have to aim to create a more inclusive socio-political climate by interconnecting Chile’s classes, elite, and the broader population. Chile certainly has, more than most other countries comparable to it, all the chances of succeeding in such a complex endeavour.

90 OECD Chile section. http://www.oecd.org/chile/ . Chapter 3 The Cultural Dimension: A Nation in Search of Identity Between the Competing Narratives of the “Center-Right” and the “Center-Left”

Roland Benedikter , Katja Siepmann , and Fabian Kupper

After a pluri-decade period of rather one-sided attention to Chile’s outstanding economic performance, the cultural and social history of the Andean State returns as a topic of both national and international discussion. The new interest in the interrelation between economy, public culture, social psychology, and politics in the country is particularly notable since 2010, when numerous events in Chile created national, international, and global media resonance. Among these events were fi r s t the mining accident of “the 33 of Atacama”, a national catastrophe turned into a triumph, and second Chile’s joining of the OECD, the association of the world’s most developed countries, both in the same year 2010. These events strengthened national pride, and all political sides tried to use them to legitimate and support their respective identity narratives of “what Chile is” and should be. Whereas the—in essence allegoric, and in some traits even mythical—narration of Chile as a unifi ed, effi cient, developed, and progressive country has been dominant in the international debate for the past 20 years, in the last couple of years this narration was persistently confronted with competing narrations within Chilean society. Alternative economic-cultural narratives, for example those stemming from the student protest movement since the 2000s, sketched the picture of a divided, unequal, and frustrated society under comparatively high economic and fi nancial pressure.

R. Benedikter (*) University of California, Santa Barbara , CA , USA e-mail: [email protected] K. Siepmann Opina Market Research Institute, Santiago , Chile e-mail: [email protected] F. Kupper e-mail: [email protected]

In the surroundings of the general elections of November and December 2013, this led to a “clash of narrations” within Chile’s highly ambiguous social, political, and economic contexts. This clash presented exemplary aspects of what the public debate on the nation’s identity and consequent “right path to follow” will look like in the coming years; and it presents some typological features that may be exemplary for the greater whole of Southern America too.

Socio-Cultural Narratives Are Becoming Political Factors of Increasing Importance

In the present age of the rise of a “global imaginary” (Manfred Steger1 ) based on the interrelation between cultural identities and global real-time media, socio-cultural narrations and (projected) self-images are becoming more and more important “contextual”2 political factors due to their omnipresence in the media. They increasingly produce a remarkable impact on traditional governmental, institutional, and party politics. This occurs because in many ways socio-cultural narratives are more enduring than traditional political, including ideological, discourse patterns, since they are signifi cantly shaped by hidden or manifest value beliefs and convictions deeply rooted in habits, social psychology, and traditions. Thus, by analyzing narrative strategies in public discourse, social change can be studied from a privileged perspective. So how are Chile’s most perceived media events of recent years interrelated with identity discourses through narrative superstructures that connect them with domestic political discourses in dispute? In order to get a grip on this question exemplary for similar constellations in other nations in transition, let us take a look at the—without doubt as much identity- refl exive as identity-forming—event of the so-called “Atacama miracle of the miners of San José” of 2010 (also known as the “2010 Copiapó mining accident”) and its effects in the following years. This will help us to examine (a) How cultural identities in today’s Chile are created. (b) How framing and emplotment are used to shape the perception of cultural identity by competing political persuasions in order to strengthen party positions and group interests. Given that narrative management is one of the core competencies in the political everyday business within today’s highly individualized and thus increasingly heterogeneous societies, it is noteworthy that the socio-cultural landscape of Chile has become an example of effi cient media management of public contextual political discourses, including socio-psychological narratives.

1 M. Steger: The Rise of the Global Imaginary, loc cit. 2 R. E. Goodin and C. Tilly (eds.): The Oxford Handbook of Contextual Political Analysis, Oxford University Press 2006. 3 The Cultural Dimension: A Nation in Search… 37

A Year of Global Media Attention to Chile: 2010

Chile’s year 2010 was characterized by an uncommon chain of extraordinary events—both benefi cial and catastrophic. They attracted unprecedented international media attention towards the “tiny country in one of the most remote corners of the earth”,3 as then acting president Sebastián Piñera expressed it. On 17 January 2010, Piñera triumphed in the presidential elections and became the fi rst democratically elected center-right-wing president since 1958, and the fi rst center-right-wing president since the end of Pinochet’s dictatorship in 1990. Just a few days after Piñera’s victory in winning the highest political offi ce, Chile’s central regions Maule and Bío-Bío were hit by a devastating earthquake with a strength of 8.8 points on the Moment magnitude scale (MMS), making it the strongest in the last 50 years in Chile and the sixth strongest earthquake worldwide since the beginning of international seismic recordings in 1990. As a consequence, a state of “natural disaster” was declared. Piñera, just a few days in offi ce, was immediately fully challenged in managing the catastrophe. Just a few months later, on 7 May 2010, Chile joined the Organization for Economic Cooperation and Development (OECD) as its fi rst South American member in recognition, as it was declared, of its excellent economic performance combined with functioning democratic institutions. But from August 2010, the crisis management of the newly elected president was challenged again by a mining accident in the desert Atacama. The incident trapped 32 Chilean miners and one Bolivian worker at a depth of 700 m for 71 days. The news and the story of the following desperate rescue adventure spread out worldwide. Not only Chileans worried about the mining workers, but, according to Chile’s National TV (Televisión Nacional de Chile , or TVN), approximately one billion people worldwide followed the story of “the 33 of Atacama”.4 The rescue operation reached a “similar media coverage to the attacks of 9/11 in the US, the beginning of the war in Iraq, or the fi nal of the Soccer World Cup in South Africa”5 of the same year 2010, as President Piñera wrote on his personal website. In fact, the occurrences in the dark depths of the earth fi lled the front pages of both national and international newspapers. They were the main subject of domestic and global TV programs day by day for several weeks. The incident thus connected Chile with the world like no other recent event. More importantly, it created an image of Chile that was responding not only to national, but to a much higher extent than usual to global audiences and expectations. The collective narrative of the event fi nally entered the national and global history as the “miracle of San José”,

3 Sebastián Piñera, quoted according to: La Tercera TV: Mario Sepúlveda sorprende ante consulta de un eventual apoyo a Laurence Golborne como candidato, accessed May 14, 2014, http://www. laterceratv.cl/index.php?m=video&v=26504 . 4 Terra: Mil milliones de espectadores vieron salida del primer minero, October 13, 2010, http:// www.terra.cl/mineros/noticia.cfm?id_reg=1516035 . 5 Homepage of President Sebastian Piñera: Expectación Mundial, undated, http://www.sebastian- pinera.cl/presidente/rescate-de-los-33-mineros/expectacion-mundial . Translation by the authors. 38 R. Benedikter et al. since the workers were eventually rescued—with one “hero”, the miner Mario Sepulveda, standing out among his peers for extraordinary courage, positivity, endurance, and solidarity.6

Chilean Miners as Global Heroes

Back on the surface, the protagonists immediately became national and international stars and were saluted, for example, with a standing ovation at the start of CNN’s annual “Hero show” in Los Angeles, which aims to recognize the “top 10 global heroes of the year”.7 The glamorous event was broadcast on Thanksgiving night 2010. It showed the 33 miners singing the Chilean national anthem on stage, with shift-supervisor Luis Urzua and “miners’ natural spokesman” Mario Sepulveda in prominent positions, holding the Chilean fl ag in the fi rst row. From the beginning, both leaders were praised by the international media for their contribution to a national and global event. Luis and Mario expressed their appreciation in a short but emotional speech at “CNN Heroes”. So enduring was the international myth created by this specifi c event and psychologically connected with Chile, that in spring 2014, 4 years later, with most “heroes” long forgotten in their home country, Hollywood produced a movie about the 33 miners, starring Antonio Banderas in the role of Mario Sepulveda. Curiously, the real Mario Sepulveda went on the fi lm set and asked Banderas for a job—as his personal gardener. He did so apparently because he was bankrupt. While Sepulveda’s myth as a “great hero of Chile” remained active independent of his real life and while his media persona remains an uncontested “super hero” internationally to the present day, nobody seemed to care about him anymore as real person just shortly after the media hype was over—not even Banderas: Mario recalls: ‘He (the fi lm star Antonio Banderas) told me he understood what I’d been through, that he was a simple actor from Spain and, when he got famous, he was overwhelmed too. I said, ‘Yes, but Antonio you have millions of dollars in the bank. I have fame but no money’.8

6 Spiegel Online: The rescue of the Chilean miners: The end of the longest shift on earth, October 14, 2010, http://www.spiegel.de/panorama/a-723012.html . 7 CNN International: Heroes show opens with salute to Chilean miners, December 24, 2010, http:// edition.cnn.com/2010/LIVING/11/20/cnnheroes.tribute.show/ . 8 C. Graham: Supermario and the pit of despair: He led 32 Chilean miners to safety after 69 days trapped in the dark … but only now can he tell the terrible price he’s paid for fame. In: Daily Mail UK, April 5, 2014, http://www.dailymail.co.uk/news/article-2597746/Supermario-pit-despair-He- led-32-Chilean-miners-safety-69-days-trapped-dark-But-tell-terrible-price-hes-paid-fame.html . 3 The Cultural Dimension: A Nation in Search… 39

How to Create a Socio-Cultural Narrative in the Globalized “Attention Economy”

This discrepancy between “cultural” (mediatic) fame and “real” (fi nancial and economic, to a certain extent also socio-political) power is to some extent telling about the reality in the current international system psychologically dominated by the combination of fi nance with a real-time “attention economy”.9 The event of the “33 of Atacama” is in retrospect an exemplary case of how a public culture of our days refl ects and at the same time constitutes an identity, particularly in heteroge- nous or even torn societies such as post-dictatorial Chile. It seemingly creates artifi cial identities in order to create a social bond irrespective of the real persons and their concrete destinies involved. Social identity is created on the occasion (and by means) of real events and persons, but both regarding the involved interests and effects reaches out beyond them – First, by transforming them into “larger-than-life” characters. – Second, by simplifying and exaggerating the construction of meaning inherent in the event and its outcome. – Third, by abstracting this meaning from reality – Fourth, by doing so irrespective of the fact that life goes on and constantly changes. Social identity, in contrast to the fl ux of life (and as a remedy against it), wants to keep things as they are on a “larger-than-life” level of the collective imaginary that directly or indirectly always claims universal value in order to be able to function as a social cement between individuals. In order to explain these logics—which characterize most current societies in transition, and Chile in particular—, various explanations have enjoyed popularity to elucidate the mechanisms at play behind the curtains. To briefl y sum them up, we can mainly discern three approaches to constructing social identity. – First , the mythological approach refers to some kind of shared extraordinary “foundational” event, for example divine revelation from a common ancestor, a shared political or social victory (such as the October revolution for communism), a catastrophe—as in the case of the mining accident—, or an ancient contract such as Abraham receiving God’s promise to become the ancestor of Jewry.10

9 M. Goldhaber: The Attention Economy and the Net. Speech prepared for the conference: Economics of Digital Information, Cambridge, January 1997. In: First Monday. Peer-reviewed journal on the Internet, http://ﬁ rstmonday.org/article/view/519/440 . 10 S. N. Eisenstadt and B. Giesen: The Construction of Collective Identity. In: Archives Européennes de Sociologie 36 (1995), pp. 72-102. 40 R. Benedikter et al.

– Second, the value - centered approach founds and unifi es a social culture by reference to shared values such as the French liberté , egalité , and fraternité (liberty, equality, and brotherhood).11 – Third , the genetic approach spots a common bloodline, which connects every member of the collective with each other.12 Cultural studies of the twentieth century have shown that cultural collectives are in reality heterogeneous groups, and that cultural identities, despite all their implicit claims, are not stable but dynamic. Advanced concepts of the emergence of cultural identities focus on the fi eld of socio-psychological and ethnological approaches. They highlight the fact that identities can emerge without common origins and values, particularly in modern times—and that public narratives play a signifi cant part in the process. Interestingly, narratives themselves are constructed not mainly by the invention but rather by the repetition of a story,13 in particular by introducing difference and variation in the repeated account of the same, i.e., by combining repetition and variation of the same . 14 As a dominant in social formations, narratives have been always applied to political systems. In their nature, they have been perceived as tools to create social coherence within a culturally heterogeneous population. Perhaps the most famous examples are: (a) The allegory for the hierarchical organization of republican Rome: “The head and his limbs” (Aggrippa Menenius).15 (b) “The kings two bodies” (Ernst Kantorowicz). (c) The famous “bellum omnium contra omnes” (Hobbes). To provide some additional, more recent examples: the US “pursuit of happi- ness”, the famous saying “from rags to riches”; or the German tale of the “Wirtschaftswunder”—all possess a high degree of integrative and identifi catory power.16 They are all narrational “ super -structures ” dedicated to unifying and stabilizing an identity in a given space-time and socio-political situation. Therefore, they are in most cases in accord with the interests of the ruling, rich and infl uential classes which dominate that situation.17

11 J. Smolicz: Core values and cultural Identity. In: Ethnic and Racial Studies, Volume 4, Issue 1/1981, pp. 75-90. 12 N. Hudson: From “nation” to “race”: The origin of racial classiﬁ cation in the eighteenth-century thought. Eighteenth-Century Studies 29/1996 (3), pp. 247-264. 13 U. Eco: Innovation and Repetition. Between Modern and Postmodern Aesthetics. In: Daedalus, Vol. 114, Issue 4, Fall 1985, pp. 161-184. 14 G. Deleuze: Difference and Repetition, Columbia University Press 1994. 15 The fable goes back to Aesop, but has seen an outstanding career in political contexts, e.g., by Agrippa Menius in the early days of the Roman republic and later by Paul in his Epistle to the Colossians (Col 2,9ff.) in order to illustrate the hierarchy of the church. 16 A. La Coeur and A. Philippopoulos-Mihalopoulos: Luhmann observed. Radical political encounters. Palgrave: New York 2013, p. 137ff. 17 M. Cortazzi: Narrative Analysis. Social Research and Educational Studies. Routledge: New York 1993, p. 70ff. 3 The Cultural Dimension: A Nation in Search… 41

The extraordinary importance of symbolic narratives—stories, in essence—in today’s development of nations is underscored by the fact that both everyday experiences and political events have to fi t into these (often unconscious) identity structures, otherwise they have diffi culties being collectively accepted. The reworking of real events into a dominant narrative super-structure in modern societies is part of the everyday business of the media, although it is only partly a conscious process from their side too. 18 Media reports adapt single events to the narrational frames that their customers are familiar with, and thus sometimes partly recreate them. People, who have a representative function in society, draw culturally signifi cant interpretations of events and thus eventually modify them to fi t perfectly into their preferred narrative super-structures. In fact, all this is almost unavoidably the case. Cultural identities emerge from discourses in which the participants use their voices to highlight or downgrade certain components of collective cultural meanings, events, and memories. Every aspect of culture can be part of the respective “negotiation about narratives”: opinions, historical, and unhistorical events, even purely invented stories.19 As in every other modern nation, the recent process of Chile’s struggle for a post-dictatorial cultural identity includes and represents the socio-economic gaps and confl icts throughout the country. The process of constituting a democratic national identity takes time and is not possible without addressing the underlying problems and confl icts by integrative narrative super-structures.20

The “Miracle of Atacama”: Facilitation of Chile’s Imagined Identity as a Uniﬁ ed, Efﬁ cient, and Progressive Country

The miracle of Atacama is one of the most important recent “identity narratives” of Chile. This is not least because the story has been told not only in the Andean nation, but all around the globe; and also because it was an exemplary human tragedy useful for creating myths. Indeed, the story that started on 5 August 2010 in the gold and copper mine of San José triggered all facets of existential, if not archaic human experience: solidarity, hope, fear, belief, transcendence, and liberation. After 17 days of trembling and numerous unsuccessful attempts, the rescue team reached the miners by boring a small hole for communication. The buried workers immediately started to express themselves: taping a paper on the borer saying Estamos bien en el refugio los 33 21 (“We are ﬁ ne in the emergency area, the 33”).

18 H. White: Metahistory. The Historical Imagination in Nineteenth-Century Europe. John Hopkins University Press: Baltimore 1973. 19 K. S. Johnson-Cartee: News Narratives and News Framing. Constructing Political Reality. Rowman & Littlefi eld: Lanham 2005. 20 K. V. Korostelina: Forming a Culture of Peace: Reframing Narratives of Intergroup Relations, Equity and Justice. Palgrave: New York 2012. 21 La Tercera: Presidente confi rma que los 33 mineros atrapados están vivos, August 22, 2010, http://www.latercera.com/noticia/nacional/2010/08/680-285875-9-presidente-pinera-confi rma- que-los-33-mineros-atrapados-estan-vivos.shtml . 42 R. Benedikter et al.

The further development of the story of the accident illustrates how a cultural discourse is shaped by two main factors. One is the voice of the participants, and the second is the degree of connectivity that every statement fi nds. 22 If a statement is accepted and repeated, it fi r s t gains resonance, and second it will connect participants within a socio-cultural forum penetrated by values and convictions.23 That was what happened with the 33 miners. When the still living miners were discovered, it only took 2 days until international rescue experts, politicians, psychologists, medics, family members, and journalists gathered at a camp in the middle of nowhere in the Atacama desert. Chile’s authorities immediately referred to the assembly as “Camp Hope”. As the artifi cially created, but suggestive name of the camp indicates, the place was an ideal breeding ground for emotional breakouts and dramatic stories. Not by chance, according to The New York Times, it attracted about 1,300 international journalists representing more than 200 foreign media outlets and 50 Chilean ones […] They have come from 33 countries on fi ve continents, from Japan to Hungary to South Africa.24 The journalists reported 24 h a day about any factual or alleged news in the depth, shared camp-life with the traumatized family members, and sometimes even invented stories and rumours. Every twist and turn of the story was transmitted by the omnipresent cameras and microphones and fi nally, after 71 days, the spectacular rescue of the 33 brought an end to their longest working shift ever. Chilean politicians, well aware of what was going on at the interface between tragedy, media hype, and identity formation, were omnipresent too. The rescue team conducted by the mining minister Laurence Golborne in person not only supported the miners with proposals for organizational effi ciency in their rescue area during the 71 days, as well as with food, joints, and pornographic magazines, 25 but also with mini-cameras to broadcast events in real-time from the mine. The images were shown on huge screens in the neighbouring “Camp Hope”, where family members of the miners watched and received professional psychological support. Not by chance, Chile’s president Sebastian Piñera showed high personal commitment to the rescue operation, giving “top priority” to the issue. It was said that he asked for daily information about the mental and physical state of the miners, the technical rescue advancements in the mine, the chronic diseases, and even the teeth problems of one of the workers.26 Piñera travelled several times to the Atacama

22 C. Luna: Story, Voice, and Culture. The Politics of Narrative in Multicultural Education. In: Working Papers in Educational Linguistics. Vol. 9/2013, Number 1, pp. 127-142. 23 J. v. Dijk: The Culture of Connectivity. A Critical History of Social Media. Oxford University Press: Oxford 2013. 24 S. Romero: Carnival Air Fills Chilean Camp as Miners’ Rescue Nears. In: The New York Times, October 11, 2010, p. 4, http://www.nytimes.com/2010/10/11/world/americas/11chile.html? pagewanted=all . 25 J. Franklin: 33 Men: Inside the Miraculous Survival and Dramatic Rescue of the Chilean Miners. Putnam: New York, 2011. 26 Spiegel Online: The rescue of the Chilean miners, October 10, 2010, http://www.spiegel.de/ politik/ausland/rettung-der-minenarbeiter-glueckauf-fuer-chile-a-722967.html . 3 The Cultural Dimension: A Nation in Search… 43 desert to show support and compassion for the fate of the families as well as to prove leadership in the rescue operation. Such an attitude produced respect and popularity for the president otherwise seen as elitist businessman who had consistently tried to cultivate an image of a “man of the people”27 despite his overwhelming wealth and foreign education at Harvard University. As the international edition of the weekly political magazine Der Spiegel ironically stated: One of the absolutely richest men in Chile as king of the miners—such a notion would have overthrown even the fantasy of a Gabriel García Márquez until just a few days ago.28 Piñera stayed more than 22 h29 at the borehole to welcome every single rescued miner personally, with tears and huge emotions of deep release broadcast live on every TV and radio channel throughout the country and the world. Additionally, Piñera invited Bolivian President Evo Morales to congratulate the rescued Bolivian worker at the entrance of the hole. Thus, president Piñera and his minister Laurence Golborne became “the faces” of the rescue operation. They stepped into the front line of the rescue operation to a certain extent because of the media, which presented a mountain of stone and earth between the politicians and the miners to be rescued. This obstacle was, as they declared, to be overcome not just by the right technology, but also by values such as hope, eagerness—and most of all—effi ciency . This vocabulary Piñera and Golborne used in various interviews not only refl ected the emotional aspect of the event, but contributed to leverage it tremen- dously. The suspense waiting for a signal of life from the miners switched to a well- mediatizised national journey and eventually joy, as in the face of the news that the buried workers were alive, the president commented: Entire Chile is crying of emotion […] the message fi lls us with joy and power, and I feel more than ever proud to be Chilean and to be the president of Chile […] But now, we have to go back to work, we have to intubate the probe with food, light, communication, but the most important thing has already arrived: the moral support. 30

27 Wikileaks: Viewing cable 10SANTIAGO25, Meet Chile’s President-Elect, Sebastian Pinera. Confi dential letter from Embassy Santiago to Washington, January 22, 2010, http://wikileaks.org/ cable/2010/01/10SANTIAGO25.html . 28 J. Glüsing: King of the comrades. In: Spiegel Online: October 18, 2010, http://www.spiegel.de/ spiegel/print/d-74549737.html . 29 W. Longbottom and G. Gurrin: “That was a long shift”. Foreman is the last of the 33 trapped Chilean miners to be delivered to freedom. In: Daily Mail UK, October 14, 2010, http://www. dailymail.co.uk/news/article-1320045/CHILEAN-MINERS-RESCUE-Back-dead-69-days- trapped-underground.html . 30 La Tercera: Presidente confi rma que los 33 mineros atrapados están vivos, August 22, 2010, http://www.latercera.com/noticia/nacional/2010/08/680-285875-9-presidente-pinera-confi rma- que-los-33-mineros-atrapados-estan-vivos.shtml . 44 R. Benedikter et al.

“It’s a Fest for Chile and It’s Perfect”

With the positive development of the story, the narrative was turned around. By plotting the events in a new order, the tragedy became what theorists call a romance: a heroic story of the struggle for success. In this story, the allegedly “true Chilean values” were frequently addressed. A catastrophe had challenged the solidarity, effi ciency, and resilience of Chile. But the unfortunate accident became a “positive” story of progress and moral supremacy—as it is the plot of every effi cient myth. The accident not only provided a brilliant stage for theatrical self-enactment to president Piñera, but also to his mining minister Golborne, who was practically unknown to the greater public before the incident. Not without some sarcasm, the minister’s closeness to and personal engagement with the workers led to the expression of Golborne as “miner no. 34” in some Chilean newspapers. Not by chance, on the rescue night of October 2010, journalists were already asking about the political future of the mining minister, who 3 years later in fact was elected as the fi rst ranked presidential candidate of the right-wing coalition Alianza por Chile because the myth of “the 33” and his media role in it lived on. But before getting a glimpse of the personal fairytale of the mining minister within the “miracle of San José” and his later odyssey in the pre-presidential elections in 2013, we have to analyze the media handling of the accident and ask, if and how it supported the Chilean center-right government’s desired international attributes of effi ciency, well-working institutions, and national unity. Piñera’s government used the accident to declare them to be national values, although they were—and are—mainly the values of the right, not so much of the left which tends to underscore instead (meta-class) solidarity, pluralism, and creative diversity. As the mining accident was the second catastrophic incident in 2010 after the earthquake in February, Piñera underlined: In a world, which is all too used to tragedy, the rescue of the miners provided material for a global celebration. The men were no longer pure miners, but heroes. 31 According to Piñera, not only the rescued miners became “others than the were before”, but Chile too became a different country: Today’s Chile is more unifi ed and stronger than ever. What started as a possible catastrophe, turned into God’s blessing. The unity, faith, loyalty and solidarity expressed by the miners in the last 70 days fi lled us all with pride.32 […] The men have become others and also Chile has become a different country. 33 Piñera—and with him the greater international community—were in state of enchanted jubilation celebrating the great national success “of Chile”. The applause of the international community put the new member of the club of the developed

31 Homepage of President Sebastian Piñera: Expectación Mundial, loc cit. 32 Ibid. 33 Spiegel Online: The rescue of the Chilean miners: The end of the longest shift on earth, loc cit. 3 The Cultural Dimension: A Nation in Search… 45 and democratic countries (OECD) in an even brighter light. On Chile’s national TV, Piñera proudly communicated the amount of phone calls and letters he received from global leaders—from Barack Obama to Pope Benedikt XVI to Angela Merkel—all of them congratulating “Chile” (not the government) for its outstanding management of the catastrophe. As the media (and many international statesmen with them) didn’t discern between Chile and the government, the government became Chile—something that can rarely happen otherwise and was indeed a blessing for the center-right. As “Chile” managed to feature a “miracle” in rescuing the miners, it became the “miracle” of the center-right government. And as the emotions were transformed into “national values”, suddenly the values of the right were “the values” of Chile. Ironically, this national shift towards the “values” of the right was fostered and furthered by international comments. European Union commission president José Manuel Barroso expressed “great admiration” and emotionally stated: The comradeship and the resilience of the miners, the thoughtfulness and efﬁ ciency of the operation and the solidarity of all concerned have given the world a message of hope and conﬁ dence.34 Brazil’s President Luiz Inácio Lula da Silva also congratulated effusively: The whole world is proud of what Chile is doing.35 Spain’s Deputy Prime Minister Maria Teresa Fernandez de la Vega called the rescue operation a “real heroic act” noticing that this was evidence of how technology can be in the service of humanity.36 For President Piñera it was a magical night […] in which life defeated death,37 and US president Barack Obama felt the Chilean miners inspired the world.38 At the end of the day, the German political magazine Der Spiegel strikingly summarized: It’s a fest for Chile and it’s perfect.39

34 Deccan Herald: World congratulates Chile on miners’, glorious’ rescue, October 14, 2010, http:// www.deccanherald.com/content/104699/world-congratulates-chile-miners-glorious.html . 35 Ibid. 36 Ibid. 37 Ibid. 38 Ibid. 39 Spiegel Online: The rescue of the Chilean miners, loc cit. 46 R. Benedikter et al.

Center-Rightist Values Brought Forward by Means of a Rescue Operation

Without doubt, cultural discourses are complex social interactions, particularly if they function as contextual political motors and are used for the purposes of legitimizing and imposing determined political values of a specifi c party or inclination on the greater whole of society, thus furthering party politics through “rescue management”. As in the case of the Chilean mining accident of 2010, the narrative of the event constructed arguments with the pretense of communicating legitimate measurements of common interest, simultaneously transforming them into political means of specifi c usefulness. In modern secular (i.e., democratic) societies, all macro-narratives of a “good life” according to specifi c political views have to be condensed into specifi c stories or narratives that are not transcendental, but concrete, and as such easy to view and to understand. Perfectly understanding these mechanisms, president Sebastián Piñera put himself in a prominent position by visiting the rescue setting numerous times while actually not contributing much more than symbolic engagement through observing the scene. The media willingly provided the perfect stage in the globalized “attention economy”40 whenever he showed up. In almost all cases, Piñera’s interviews repeated and emphasized the same thing: the emotional aspect of the event and the praise for the national “Chilean” effort made to rescue the 33. The political discourse of those in charge purposely created the image of “unity” and “effi ciency” of “the nation” by repeating it innumerable times and by self-referencing it throughout the 12 weeks of coverage.

Reworking Cultural Identity

What were the cultural values that were highlighted in the context of the rescue operation of 2010 in order to “rework” Chile’s post-dictatorial cultural identity in favour of the one and only democratic center-rightist government since the end of the Pinochet era? One focus lies without doubt (once again) on the voice of Sebastian Piñera, another on a particularly high degree of repetition in the statements of the newly elected center-rightist president, eagerly absorbed both by the national and international communities. After the spectacular rescue action on 13 October 2010, Piñera gave a dramati- cally emotional interview to the Chilean TV-channel Canal 13 , controlled by 67 % of another “big economic group” or “Chilean family”, the Luksic’s41 who feature

40 M. H. Goldhaber: The Attention Economy: The Natural Economy of the Net (1997), http://www. well.com/user/mgoldh/natecnet.html . 41 Economía y Noticias: Grupo Luksic fi rma acuerdo de compra por el 67% de Canal 13 en US$55 millones, August 6, 2010, http://www.economiaynegocios.cl/noticias/noticias.asp?id=76375 . 3 The Cultural Dimension: A Nation in Search… 47 strong ties with Harvard and co-fi nance its Latin American program.42 The president talked about the global resonance of the accident and the congratulations he received from numerous presidents and statesmen worldwide. Piñera proudly stated: I feel that Chile fulfi lled its duty with Chile, I feel that Chile was at the level of its challenges, I feel that Chile has become a more unifi ed and stronger country, in which we love each other more than before, and I feel that Chile has become a more respected and more valued country in the whole world. […] Chile has succeeded to win a place of caress , respect and admiration in the whole world.43 Only 2 days after this interview, Piñera boarded a Chilean aircraft heading towards Europe to meet the head of states of the United Kingdom, France, and Germany. The picture of Chile’s president was especially striking (and metaphori- cally telling) in this occasion, since great parts of the multi-billionaire Piñera’s wealth result from stakes in the Chilean airline LAN: in 2010 Piñera unloaded his 26 % stakes in the airline for US$1.5 billion, making him one of the richest active politicians on the globe.44 On the occasion of his European visit, Piñera brought some special gifts for British prime minister David Cameron, (former) French president Nicolas Sarkozy, German chancellor Angela Merkel, and others. According to the magazine Que Pasa the gift bags were containing rocks from inside the Atacama mine, along with copies of the initial hand- written message from the miners telling rescuers that they had survived the accident and were fi ne. 45 A sentence was written on every “Chilean gift bag” to the European leaders: In your hands are the rocks from the depths of the earth and the spirit of 33 Chilean miners.46

Transforming an Accident into an International Political Triumph

A remarkable journey began. Piñera’s ﬁ rst stop: London. The Guardian reported on October 19, 2010: In recent years, Chilean presidents have enjoyed little fanfare when visiting Britain: ignored by the media, unknown to the public, and banished to champagne receptions with obscure dignitaries. […] Yesterday, their president, Sebastian Piñera, was treated to a star’s welcome,

42 Harvard University, David Rockefeller Center for Latin American Studies, Adrónico Luksic Fellowships: http://drclas.harvard.edu/people/scholarfellowship-type/andr%C3%B3nico-luksic- craig-visiting-scholars-and-fellows . 43 Sebastián Piñera in an interview for the Chilean TV channel Canal 13 on October 13, 2010, http://www.youtube.com/watch?v=R1LxT-y2tf4 , retrieved May 12, 2013. 44 Forbes: Proﬁ le Sebastian Piñera: URL: http://www.forbes.com/proﬁ le/sebastian-pinera/ , January 15, 2013. 45 The Sydney Morning Herald: Chile’s Piñera heads to Europe, October 16, 2010, http://news. smh.com.au/breaking-news-world/chiles-pinera-heads-to-europe-20101016-16nz6.html . 46 Ibid. 48 R. Benedikter et al.

visiting David Cameron at Downing Street and enjoying an audience with the Queen at Buckingham Palace. The Queen has received many unusual gifts in her time, but surely few as evocative as a lump of rock taken out of the San Jose mine in the Atacama desert by the miners rescued last week. Cameron got a piece too.47 Apparently emotional, the UK prime minister made clear that the UK would remain a true friend of Chile.48 In face of the rescue operation in San José, Piñera promised: We have initiated a country-wide effort to create a new treatment in terms of how to protect the lives, integrity, dignity and health of our workers […] (We) cannot guarantee that we will not have accidents in the future, but we can guarantee that we will do whatever is necessary to have a more secure mining industry. 49 As Piñera stated in an interview with BBC’s HARDtalk programme a day earlier, this also had to include better protection of “mine safety whistleblowers”, 50 since some workers had criticized that there was a culture of fear at the pit, with miners unwilling to speak out over safety concerns because they were afraid of losing their jobs. 51 In face of the announced reforms and changes, Cameron and Piñera emotionally afﬁ rmed the two countries “longstanding relations” and accentuated “common values and aspirations”. According to Mercopress ( South Atlantic News Agency ), both politicians not only agreed to raise bilateral trade between the two countries—at the time already a remarkable £1.73bn—but also wanted to strengthen co-operative efforts in defence and foreign policy.52 According to the statesmen, Antarctica and the Falklands Islands in particular were of shared interest; and Cameron underlined that he was doing everything he could to regain some of Britain’s pioneering spirit in trading with South America.53 In the ﬁ elds of science, innovation, and technology, a new agreement between the British Antarctic Survey (BAS) and the Chilean Antarctic Institute will allow both countries to use each other’s research stations and other assets to help deliver research programs in a part of the world which is vital for understanding the speed and impact of climate change.54

47 The Guardian: Sebastian Piñera visits PM and the Queen during actio-packed UK-trip. October 18, 2010, http://www.theguardian.com/world/2010/oct/18/sebastian-pinera-david-cameron-queen . 48 Ibid. 49 Ibid. 50 BBC News: Chile’s Pinera ‘to protect mine safety whistleblowers’. October 18, 2010, http:// www.bbc.co.uk/news/world-latin-america-11565850 . 51 Ibid. 52 Mercopress: Cameron and Piñera discuss Falklands, Antarctic cooperation and conﬁ rm close links. November 16, 2010, http://en.mercopress.com/2012/11/16/cameron-and-pinera-discuss- falklands-antarctic-cooperation-and-conﬁ rm-close-links . 53 Ibid. 54 Ibid. 3 The Cultural Dimension: A Nation in Search… 49

Furthermore, Cameron conﬁ rmed that both countries’ scientiﬁ c cooperation had to include exchange programs for English teachers to travel to the Andean State to help Chile become a bilingual—and digital—nation.55

A “Meta-Party” Strategy?

In London, Piñera had just started to turn a catastrophe into an international political opportunity. By interpreting the story of “the 33” and its fi nal conclusion—the successful rescue of the miners—in his way, Piñera went on directing the attention to political issues. But although he used the event to strengthen center-rightist views and approval for his government, identifi ed as “Chile”, the overall strategy was not simply that of a single party. It is probable that in the same situation the center-left, if in power, would have done exactly the same as Piñera: creating political “cash” both at home and abroad out of the “miracle” of the “33”, in order to promote political issues and strategies through the emotional addition of “values”. Thus, Piñera’s overall procedure was to a certain extent a “meta-party” one, and it followed the rules characteristic of cultural narratives used for socio-political means. As a fi rst step, Piñera’s narrative strategy had defi ned a goal: to save the endangered lives of 33 miners, and thus to “serve the good and the morally right”—i.e., something that is right to do and as such has no alternative, which is the best constellation that can happen in an otherwise over-complex and ambiguous world. Second , the narrative defi ned a beginning: a catastrophe as a natural, God-given challenge. Third , it highlighted the tools of success that enabled “the Chileans”—a mass allegedly identic in itself—to step up to the challenge. And fourth, it provided a happy ending which usually helps the endurance and long-term stability of the narration and its myth. In this way, the narrative of the “33 of Atacama” included all structural elements of a success story creating and reinforcing an image of Chile as a country of “high (conservative) values” and economic success. The management of this narrative bore fruit right from the fi rst visit of the Chilean president to Europe, because it assembled all elements necessary to transform a concrete event into an enduring myth: Here is a […] defi nition of the cognitive construct that narratologists call ‘story’: 1. The … story involves the construction of the mental image of a world populated with […] characters and objects. 2. This world must undergo not fully predictable changes of state that are caused by non-habitual physical events: either accidents (‘happenings’) or deliberate actions by intelligent agents. 3. In addition to being linked to physical states by causal relations, the physical events must be associated with mental states and events (goals, plans, values, emotions). This network of connections gives events coherence, motivation, closure, and intelligibility and turns them into a plot.56

55 Ibid. 56 M.-L. Ryan: Narrative. In: D. Herman and others (ed.s): Routledge Encyclopedia of Narrative Theory. Routledge: London 2008, pp. 344–348, here: p. 347. 50 R. Benedikter et al.

This and nothing else was the “contextual” transformation of the mining accident of Atacama into a socio-cultural symbology and, later, into a politico-diplomatic issue. But how did Piñera get on with the French elite?

Sealing Strategic Alliances

Paris, 21 October 2010: Piñera and French president Nicolas Sarkozy seal a multidimensional “strategic alliance” and convergence in international affairs.57 In the Chilean-French relationship since then, the energy sector seems to be of special interest, given that both countries are committed to innovations in the fi eld of renewable energies. But at the same time, Piñera somewhat surprisingly stated in Paris: Chile must prepare for the world of nuclear energy, although no decision will be taken during this mandate.58 As part of the politicians’ agreement, Chile sent 40 students to French universities to specialize in nuclear energy studies and expect to have 1,500 scholarships for Chilean students in France by 2015. 59 On the other hand, France committed to the creation of “excellent schools” in Chile “to promote French culture and language through the Alliance Francaise ”60 ; the contribution of know-how in the areas of strategic urbanization and restructuring of public services, especially in the devas- tated regions affected by the earthquake in February 2010; and to the provision of satellite technology, including space surveys and data, until Chile has developed its own instruments to orbit the earth.61 Moreover, Piñera and Sarkozy signed a joint declaration calling for a review of the United Nations Security Council making it ‘more representative of today’s world and more effi cient regarding the security problems and challenges of the twenty-fi rst century’. Similarly, both sides called for a consensus to conclude ‘with an ambitious, global and balanced agreement the trade negotiations of the (latest) World Trade Organization round’.62 Last but not the least, Piñera praised Sarkozy for his leadership and courage in the implementation of pension reforms—which in truth actually paralyzed France with protest, strikes, and violence over several months.

57 Mercopress: Piñera seals in Paris wide-ranging “strategic alliance” with France. October 21, 2010, http:// en.mercopress.com/2010/10/21/pinera-seals-in-paris-wide-ranging-strategic-alliance-with-france . 58 Ibid. 59 Ibid. 60 Ibid. 61 Ibid. 62 Ibid. 3 The Cultural Dimension: A Nation in Search… 51

An Unfortunate Slip of the Tongue

Overall, the Paris visit turned out to be another triumph for the center-rightist president, who had become the “rescuer of the miners” and thus was not only a politician anymore, but a moral hero in the eyes of the world. What was next in Piñera’s European “action-week”? Europe’s economic lead nation Germany. Berlin, 25 October 2010: The trip to Germany started with an embarrassing faux- pas—at least from the German perspective, since Chile’s former president was known for some “unclear expressions” and “slips of tongue” in his home country. In Berlin, Piñera wrote “Deutschland über alles” (“Germany above all”) into the offi cial guest book during an encounter with then German federal president Christian Wulff.63 Bizarrely, this phrase is the fi rst line of the old German national anthem (“Deutschlandlied”) that has been nationally and internationally outlawed since the Nazi period, given that it was the embodiment and main slogan of the Nazi’s ideology. Nevertheless, without publicly embarrassing the guest, Angela Merkel welcomed Piñera the next day. She also received a lump of rock with thanks and promised to give it a special place in the chancellor’s offi ce to demonstrate the intimate relationship she felt with Chile and Piñera.64 The most important German national news broadcast Tagesschau even talked about a “special chemistry”65 between the two heads of state. Refl ecting on the “miracle of San José”, Merkel euphorically declared: This was a real victory of humanity in a nation which respects and honors every single human being, and goes on searching until the last one missing is found. We were touched a lot by all of that. You know that the entire world was cheering and sharing joy with Chile.66 Besides the mutual show of sympathy, Merkel and Piñera also talked about business options for the Andean nation, that according to Merkel, witnesses an astonishingly good economic development with high rates of growth.67

63 A. Fischhaber: Piñeras Besuch beim Bundespräsidenten: Chiles Präsident und die falsche Hymne. [Piñera’s encounter with Germany’s federal president: Chile’s president and the wrong national anthem]. In: Der Spiegel, October 25, 2010, http://www.spiegel.de/politik/deutschland/ pineras-besuch-beim-bundespraesidenten-chiles-praesident-und-die-falsche-hymne-a-725140. html . 64 Ibid. 65 J. Segador: Merkel umwirbt Chile als wichtigen Partner [Merkel courts Chile as important partner]. In: Die Tagesschau, January 16, 2013, http://www.tagesschau.de/ausland/eulateinamerika104. html . 66 Latina-Press: Chile: Sebastian Piñera beendet Europa-Reise [Chile: Sebastián Piñera completes Europe journey]. October 22, 2010, http://latina-press.com/news/52937-chile-sebastian-pinera- beendet-europareise . 67 Ibid. 52 R. Benedikter et al.

In turn, Piñera called Mrs. Merkel a “great leader” several times and considered her the most important political actor and partner for the ﬁ rst EU-CELAC summit (CELAC: Community of Latin-American and Caribbean States) in January 2013, which took place in Chile.68 Again, Piñera went the whole hog through to total victory: both parties signed a “partnership of resources” linked to the domains of (a) Mining, energy, and mineral resources (b) Investment, innovation, and technological know-how Since in recent decades China had taken over Europe’s leading position in Chile69 as their most important trade partner, Merkel aspired to regain lost territory: The dynamic development of the whole region shows us here in Europe that we have to hurry on, that we have to improve consistently our competitiveness and that we have to reduce our debts. Chile’s economic uptrend, for example, is based on the fact that Chile doesn’t go into debt. Chile thus should be a motivation for Europe. 70 In particular, Merkel and Piñera talked about the necessity of abating trade barriers and forging a Free Trade Agreement between the European Union and Chile. Piñera accordingly commented: Together we will face this new era. We were talking with the chancellor about the possibili- ties to (a) accelerate the integration process of Chile with the European Union and (b) foster German investments in Chile, especially in the domains of education, science, technology and sustainable energies. We also want to accelerate our cooperation in other ﬁ elds of shared interest. This is linked to the sphere of culture, but also to greater co-work in the area of politics and in search of a so to say ‘open sky’ between Europe and Chile. 71 In the same interview, the question of whether Chile could be a good model for healthcare and pension reforms in Germany was raised. Merkel responded in the negative, pointing to the fact that Chile is not the only model to be followed. Chile’s president answered: Miss Chancellor, that’s true: Chile is not the only model to be followed. But we want to be a very good model for you.72

A Remarkable Success

All in all, Piñera’s European travels in 2010 were a total success. They decisively strengthened Chile’s relations with the continent and its standing within the family of global democracies. As an important, if not crucial, prerequisite, the narrative of

68 European Union External Action: The EU’s Relations with Latin America and the Caribbean, http://www.eeas.europa.eu/lac/index_en.htm . 69 J. C. Gachúz: Chile’s Economic and Political Relationship with China, loc cit. 70 J. Segador: Merkel umwirbt Chile als wichtigen Partner [Merkel courts Chile as important partner], loc cit. 71 Latina-Press: Chile: Sebastian Piñera beendet Europa-Reise [Chile: Sebastián Piñera completes Europe journey], loc cit. 72 Ibid. 3 The Cultural Dimension: A Nation in Search… 53 the “miracle of the 33” helped to pave the way for the triumph by introducing Chile as a moral authority, as a model for the world, and by identifying the nation with the conservative values of the acting conservative government. It made sure that “Chile” appeared as a unifi ed and integrated, solid, and strong society, at least from the outside. By employing the “miracle of the 33” as a symbol of Chile’s ability to cope with chal- lenging situations, Piñera gained international approval and unifi ed his own country behind a common cause, downplaying all internal divides and socio-ideological rifts. The event provided everything needed to bring structure to cultural contingency: (a) The narrative of the “miracle” organized cultural values in a goal- and practice- orientated way. (b) The narrative distributed the roles of protagonists to concrete persons and phenomena. (c) The narrative emphasized and attenuated a whole series of details rich in emotional nationalism. In the end, not only did Piñera’s story sound pretty much like a fairytale, but it provided a huge reward in its political effects. As an initial conclusion, we can assert that the mining accident provided excellent conditions to globally distribute an image of Chile as an integrated, just, morally sound, highly developed, and rapidly developing, progressive, and open country. The respective myth is alive still today, although its origins in the mining accident of Atacama have long been forgotten. Piñera’s voice was found to be highly connec- tive within international society and led through permanent repetition and variation of the same story to increased acceptance of his political statements as well as to concrete economic steps towards the “liberation” of international trade and the integration of Chile into the Western world. In the encounters with European leaders, Chile and its president were treated as a morally high-standing partner from a surprisingly high-performing country. Chile’s story, as told by Piñera, indeed appeared fl awless and “beautiful” to most outsiders. It seemed to know only winners: the rescued miners, Chile’s government, Chile as a nation, Chile as a unifi ed and just society, and the global community which was happy to have such a seemingly perfect model. In this version, the responsibility for all dimensions in play (health, safety and social protection, renumeration and legal responsibility) was apparently perfectly regulated, and Chile’s supervisory and regulatory authorities were apparently in fi rm charge and determined to defend the safety and interests of the “common people” and the working class. But despite the fact that the “miracle of Atacama” myth transports these alleged happenings globally until the present day, a closer look reveals the real events to be more complex, multidimensional, contentious, and ambiguous. More importantly, it reveals that there was and is—as always—more than just one version of the story. What were the downgraded variations, the hidden shadows, and the deleted details of the “success” narrative that so greatly infl uenced Chile’s image (and thus standing) in the world? How can we take them into account to provide a slightly more balanced picture of the real cultural and social situation of Latin America’s “socio- economic jaguar”? 54 R. Benedikter et al.

After the Fest, Soberness Returns: Competing Narratives on the “Miracle of the Miners”—And Thus, of the “Miracle of Chile”

As with every narrative, we fi nd different versions and variations of the events both preceding and following the mining accident of the 33. Statements and reports by journalists, independent media, and non-governmental observers didn’t change the basic narration of the event as provided by Piñera. But they contained story elements differing in defi ning the problem; in judging the goals, interests, and values involved; and with regard to the alleged unity of government and people, the solution, and the coda. While Piñera’s version is without doubt, to the present day, the most commonly accepted by the greater public particularly on the international stage, as promoted by the government, the owners of the mine, some family members infl uenced by the government and the mainstream press,73 there have been—and remain—competing narrations to that of Piñera too. Various elements of the account of what happened, of the implications and backgrounds, and of what the outcome was changed colour or added facets previously not existing or not seriously considered. First of all, according to Piñera’s statement in London (“[We] cannot guarantee that we will not have accidents in the future, but we can guarantee that we will do whatever is necessary to have a more secure mining industry”74 ), the tragedy of “the 33” was an accident that was impossible to prevent due to the inherent risks involved in working underground. In contrast, Chilean sociologist and political scientist Francisco Herreros summarized the government’s version and discursive strategy in framing the accident and its responsibilities as follows: What matters is to work effectively to get the trapped miners out alive. The issue of criminal liability will be dealt with after the rescue operations are concluded and, in any case, it is a matter for the courts. The salaries of trapped miners, as well as the compensation and social security for their families, is primarily the responsibility of the company, secondly of the mutual fund, and thirdly, of the insurance companies, not of the government. Only in the event of failure in any of the links in the chain the government should intervene via its subsidiary role.75 But according to Herreros and others, mining unions and worker associations tell a competing narrative to this governmental view,76 a “different” story that as yet is seldom articulated in the international context.

73 F. Herreros (translated by Roberto Navarrete): Comment & Analysis: Chile’s Trapped Miners: The Untold Story of a Tragedy with a Happy Ending. In: Red Diario Digital, August 27, 2010, http://www.alborada.net/herreros-chile-mining-neoliberal-0810 . 74 The Guardian: Sebastian Piñera visits PM and the Queen during actio-packed UK-trip, loc cit. 75 F. Herreros (translated by Roberto Navarrete): Comment & Analysis: Chile’s Trapped Miners: The Untold Story of a Tragedy with a Happy Ending, loc cit. 76 W. Grassie: Seeking Truth in a World of Competing Narratives. In: The Hufﬁ ngton Post, April 30, 2012, http://www.hufﬁ ngtonpost.com/william-grassie/seeking-truth-in-a-world- _b_1452389.html . 3 The Cultural Dimension: A Nation in Search… 55

According to this version, for the miners themselves, the story starts much earlier than the accident. Most of them point out that the San José mine has been in an almost uninterrupted operational status since 1869 and thus used “an artisan-type of mining technology.”77 The mine was taken over by the San Esteban Primera Mining Company (Marcelo Kemeny and Alejandro Bohn) in the mid-1980s.78 Francisco Herreros delivers a detailed version of the “other” narrative that is supported by the majority of Chilean mining workers themselves: Although the minerals in the mine are of low grade, 0.8% copper and 2.5% gold, exploitation is still profi table using methods of medium-scale mining, namely, exploitation by volume, by blasting, tunneling and the movement of large amounts of material with mechanized equipment. Initially, the owners of the mine worked with a natural fortifi cation consisting of a rock slope of thirty meters thickness between sections of the vein in operation. If they were to continue with this approach, the owners could go on operating the mine for at least another forty years. The problem is that […] in order to increase production for the sake of profi t, the rock slope separating the sections of the vein was reduced to ten meters. As a matter of gravitational physics and rock mechanics, the weight of the mountain tends to fi ll the void created by the tunnels. So, unless wedging fortifi cations are properly built with bolts and mesh, the mine begins releasing rock material until it starts to collapse. That’s exactly what happened at 14:30 of the fateful August 5, 2010. At approximately level 350 meters below surface, a huge rock about one million tons ‘sat’ on the tunnels and the access ramp, leaving the 33 workers who had just entered their shift trapped.79 It thus appears, in the miner’s version of the story, that the over-proportional profi t orientation of the owners breached safety regulations and led to a lack of required fortifi cations suffi cient to prevent the release of rock material. Moreover, according to Article 79 of Chile’s Mining Safety Regulations in a mine in operation there must be at least two main routes of communication with the surface, be it shafts, ‘dugouts’ or tunnels, so that the interruption of one of them does not affect transit through the other.80 This rule was not respected in the San José mine. If it had been, the 33 miners would have been easily rescued. More importantly, those highly risky conditions had been constantly denounced for years by workers union leaders, who had strug- gled for the modernization or permanent closure of the mine since 2001. After years without an effective response to the problems reported, Chile’s regulatory agency SERNAGEOMIN, the National Geology and Mines Service in charge of mining safety, reacted on the death of miner Fernando Contreras, who died in an accident in 2006, and decreed the (temporary) closure of the mine in 2007. But only a year later, according to Francisco Herreros, the same regulatory agency authorized the reopening of San José, even though the mine remained

77 F. Herreros (translated by Roberto Navarrete): Comment & Analysis: Chile’s Trapped Miners: The Untold Story of a Tragedy with a Happy Ending, loc cit. 78 Ibid. 79 Ibid. 80 Ibid. 56 R. Benedikter et al.

without a second, life-saving emergency transit towards the surface, basing its decision on the company’s presentation of a draft ventilation, and a electrical and geo-mechanical study which included reinforcement systems and geotechnical monitoring.81 In the meantime, the owner, the San Esteban Primera Mining Company, seems to have sacked the entire workforce and re-started the mine’s exploitation with a new contingent of workers, who had broken up with the workers union and had been convinced that there were now appropriate, if not optimal, conditions for work.

The Accident: No Romance, But an Ongoing Problem of Neglect of the Working Class by the Chilean System— And Thus of Inequality?

This “alternative” narrative of the miners themselves neither tells of a romance nor of a tragedy.82 It rather describes an ongoing practical problem: the confrontation of a powerless party of jobholders with the regulative power of the party of employers. Compared with the heroic, condescending rescue story of “the 33 miners” though, the long story arc, the lack of change, the unused chances, the missing central protagonist, and the missing happy-end of this notorious confrontation weaken the discursive attractiveness of the narrative to the public. Instead of addressing the audience in an emotional-triggering lingo, class struggles in Chile occur in a long, seemingly never-ending chain of events, which often seem unconnected to each other, and which due to their decades of unsolved problems and lack of solutions and tangible perspectives tempt the public to look away. The essence of the “alternative” narrative on the “miracle of Atacama” is: Aware of the psychological contradictions—the need to provide a livelihood to their families in exchange for a daily risk of life—the Chilean miners went on working underground despite their knowledge of the lack of security. And the owners of the mine continued with business as usual, writing letters to the mining unions admitting that the complaints included a number of facts which we shall discuss […], although they do not conform to a rational structure, often veering away from the legal underlining that the workers union’s perspective represents a particular and biased viewpoint. 83 Eventually, the San Esteban Primera (SEP) Mining Company stated: It is important to remark that the [workers union’s] statements […] reveal a lack of serious technical base and reﬂ ect only the personal opinion of its members. SEP always executes its work based on exact geo-mechanical studies supported by professionals in the ﬁ eld, in

81 Ibid. 82 N. Frye: Anatomy of Criticism. Princeton University Press: Princeton 1957. 83 F. Herreros (translated by Roberto Navarrete): Comment & Analysis: Chile’s Trapped Miners: The Untold Story of a Tragedy with a Happy Ending, loc cit. 3 The Cultural Dimension: A Nation in Search… 57

compliance with the rules contained both in the national regulations on the fi eld and on other laws that apply to the execution of underground mining tasks [in Chile]. 84 The slip of the tongue though was SEP’s managers’ subtle hint that the group of workers who submitted the appeal corresponds to an organization which in fact has no recognition in law. 85 In the eyes of the miners, this refusal to cooperate on any problematic issues illus- trated once again the inferior position of social organizations in the socio- political discourse of Chile—as documented long before the catastrophe occurred. Miner union leaders, therefore, argue to this day that the accident in the San José mine was a long-predicted consequence of an economic system that privileges private profi ts over all other considerations, including safety and even the lifes of those who, with their work, generate the profi ts.86 There seems to be at least some rationale in such a view. In fact, the San José mine witnessed three fatal accidents resulting in death before 5 August 2010. According to Chile’s National Geology and Mines Service SERNAGEOMIN—an institution that operates with just 16 inspectors with “super-abilities” to examine more than 4,500 mines in Chile—the average number of mining accidents ending in death was about 40 per year in 2010,87 with allegedly not much change until today. Although the unsafe conditions and accidents are in many cases unreported by the media since the public got bored by always hearing the same news, there remain daily occurrences that seem to represent the rule rather than the exception—almost like in a third-world country. For most Chilean miners, the disaster was an inevitable consequence of the unsafe working conditions in the mine, and not an inevitable accident inherent to working underground, as Piñera’s statement willingly or unwillingly suggests. In the perspective of the “competing narrative” of the miners, both the owners of the San José mine, the supervisory and regulatory authorities and thus ultimately the government, shared the responsibility for the tragedy rather than being the “heroic saviours” of “the 33”. At every opportunity, Chilean worker unions have underlined the point that in the Chilean mining sector working protection falls short of profi t maximization. In their narrative, the catastrophe was a predictable outcome, since in the end the accident was a direct result of systemic (and systematic) exploitation. If the (costly) minimum-security standard of two exits had been executed, there would not have been any challenge in the mine of San José. And this is, according to this “competing” narrative, just one aspect of many removed by the media and public euphoria about the rescue.

84 Ibid. 85 Ibid. 86 Ibid. 87 Ibid. 58 R. Benedikter et al.

The Alleged “Transformation” of the Workers’ Lives— Allegory or Reality? On the Destinies of Heroes in a Divided Society

Whether this is the case or not, we have to take note that there are alternative narratives about the ongoings, and that these narratives, in contrast to those—certainly equally legitimate—told by the center-rightist government of Piñera, do not end with the rescue of “the 33 of Atacama”, but go on beyond the rescue. They follow up the events since the “happy end” of “the 33” of San José, since their lives did not end with the successful rescue action, but went on. So what really happened to the 33 after the “miracle of San José” in 2010? Undoubtedly, the workers became “different” persons after their “resurrection”, both allegorically and in reality. On the one hand, they were transformed from real persons into mythical fi gures, with or without their permission, and in the service of a strongly nationalist mythology and unity. Back in life they were no longer simple miners breaking rocks, but “heroes” of “contemporary history”—some more, some less.88 In face of the extraordinary international media interest in the main characters of Chile’s “miners reality show”, i.e., in group leader Luis Urzúa, fi rst-aid attendant Yonni Barrios, clown-like joker Mario Sepúlveda, amateur triathlete Edison Peña or “spiritual leader” José Henríquez, in the aftermath of the event many of the unexpected protagonist miners tried to escape their former class condition by capitalizing on their fate. They became chicos marketing (marketing boys): full-time self-marketers.89 As a result of the global thirst for sensational information and the rules of competition in the globalized “attention economy” sector, interview remunerations reached six-digit-amounts in US dollars in the fi rst weeks after the successful rescue. The “sporty miner” Edison Peña not only ran a marathon in New York’s Central Park only 3 weeks after his liberation from the mine, but also imitated Elvis Presley in the US-Late-Night-Show of talkmaster David Letterman.90 “Shift leader” Luis Urzúa, whose alleged secret for keeping the men bonded and focused on survival was democracy [or majority decision-making]91

88 K. Ehringfeld: Grubenunglück von Chile: Wie Minenarbeiter als Marketingprofi s scheitern [Mining accident in Chile: How mining workers fail as marketing professionals]. In: Der Spiegel, October 12, 2011, http://www.spiegel.de/panorama/grubenunglueck-von-chile-wie-minenarbeiter- als-marketingprofi s-scheitern-a-790981-druck.html . 89 Ibid. 90 M. Viera: After a tough year, a Chilean miner returns to run. In: The New York Times, November 2, 2011, http://www.nytimes.com/2011/11/04/sports/edison-pena-returns-to-new-york-to-run- marathon-again.html?_r=0 . 91 R. Carroll and J. Franklin: Chile miners: Rescued foremen Luis Urzúa’s fi rst interview. In: The Guardian, October 14, 2010, http://www.theguardian.com/world/2010/oct/14/chile-miner-luis- urzua-interview . 3 The Cultural Dimension: A Nation in Search… 59

received an audience with the pope92 ; and other rescued “miner heroes” danced in Disney World in Orlando with Mickey Mouse and Donald Duck.93 But, predictably, after a while journalists left and the media found new heroes; and thus the bubble of fortune and wealth burst for the real persons behind the media hype. Hardly any of the “33 of Atacama” found their way back to normality. In 2011, only 4 of the 33 had a permanent job,94 and the majority were living under worse conditions compared to the time before the accident, struggling with depression, panic, nightmares, indebtedness, and isolation. Miner Samuel Avalos, who today sells pirate CD’s on the street, commented: We were like rock stars. People climbed trees to see us.95 But like many others, even “marathon-man” Edison Peña couldn’t cope with the loss of popularity and was hospitalized with alcoholism in 2011.96 Some of the miners were seen selling vegetables on the local market of Copiapó in 2013,97 but most of the men appear to be unable to act and remain in a state of waiting, swallowing pills until the promise of a better life comes true. The 33 allegedly received no compensation for their misfortune, neither from the Chilean government nor from the owners of the San José mine. In 2012, the 14 oldest and sickest workers were assured of a disability pension of 250,000 Chilean Pesos (approximately US$470) per month,98 which is hardly a match for the high cost of living in Chile which equals and in many cases even tops those of many US towns and cities. Meanwhile, the other miners submitted a joint suit against the government that had so emotionally “rescued” them promising eter- nal gratitude for their example, demanding “just compensation” for the odyssey underground. Some of them also hoped to make money with the ﬁ lm and book rights of the story, since several Hollywood production companies offered millions to obtain the rights to transferring the “Chilean miracle” to the screen. In 2011, the rights were sold to Mike Medavoy, the producer of “Black Swan”, and journalist

92 Aciprensa: Líder de los mineros chilenos rescatados visita al Papa por Año de la Fe. October 16, 2012, http://www.aciprensa.com/noticias/lider-de-mineros-chilenos-rescatados-visita-al-papa- por-ano-de-la-fe-68640/#.U41-5xZ0fs0 . 93 Disneyadictos: Homenaje a los mineros chilenos en Walt Disney World, February 1, 2011, http:// www.disneyadictos.com/2011/02/homenaje-los-mineros-chilenos-en-walt.html . 94 K. Ehringfeld: Grubenunglück von Chile: Wie Minenarbeiter als Marketingprofi s scheitern [Mining accident in Chile: How mining workers fail as marketing professionals], loc cit. 95 J. Franklin: Chilean miners struggling with fi nancial and psychological problems. In: The Guardian, August 4, 2011, http://www.theguardian.com/world/2011/aug/04/chilean-miners- fi nancial-psychological-problems . 96 M. Viera: After a tough year, a Chilean miner returns to run, loc cit. 97 J. Franklin: Chilean miners struggling with fi nancial and psychological problems, loc cit. 98 R. Romo: Lifetime pensions awarded to 14 of the trapped Chilean miners. In: CNN International, August 31, 2011, http://edition.cnn.com/2011/WORLD/americas/08/30/chile.trapped.miners/ . 60 R. Benedikter et al.

Héctor Tobar.99 Yet, even after the production of the movie the question of compensation for the miners remains open. At the same time, the support of the greater population and its solidarity with the miners didn’t last too long: only a year after the spectacular rescue, polls found that the miners were perceived as greedy and ungrateful by many Chileans. 100 Did the spotlights actually transform the miners in high-ﬂ ying media stars who eventually lost their grip to the ground of Chile’s reality?

The Path of a Hero

Mario Sepúlveda, the clown-like miners’ spokesmen who, as the second to be rescued, left the mine cheering, dancing, singing, and hugging everyone (president Piñera himself got three long hugs), later complained about the public perception of “the 33” as wheeler-dealers, even though—or because—Mario did best of all his colleagues in self-marketing and self-capitalization. Popularly known as “Super- Mario”, Sepúlveda opened his own consultancy fi rm after the accident giving manager courses in coping with crisis situations. In 2011, he travelled around the globe giving speeches on motivation techniques, group dynamics, self-control, democratization of workforces, and safety in the mining industry.101 He even opened an amusement park in the periphery of Santiago in 2011, including horse races, soccer fi elds, and festival areas.102 In 2011, the only way to communicate with Super-Mario seemed to be through his wife, Elvira Valdivia, who manages a successful family business taking 40 Centavos of every Peso Mario makes. According to Der Spiegel information, the cost of interviewing Super-Mario was 1.8 million Chilean Pesos (around US$3,300) in 2011 and should be somewhat less today. Super-Mario’s homepage shows that he’s engaged in international conferences on spiritual leadership. 103 As a consequence, in the fi rst 2 years following the successful rescue Sepúlveda was treated and celebrated as a star—both nationally and internationally. But apparently the gap between myth and reality also grew larger for the uncontested “hero” of the Atacama “miracle” over time. The real Sepúlveda in 2014 seems to be struggling with fi nancial problems due to a lack of commissions.

99 Huffi ngton Post: Chilean Miners Sell Movie Rights To Michael Medavoy, Jose Rivera To Write Screenplay, July 25, 2011, http://www.huffi ngtonpost.com/2011/07/24/chilean-miners-sell-movie- rights_n_908248.html . 100 K. Ehringfeld: Grubenunglück von Chile: Wie Minenarbeiter als Marketingprofi s scheitern [Mining accident in Chile: How mining workers fail as marketing professionals], loc cit. 101 Cf. the offi cial homepage of Mario Sepúlveda: http://mineromariosepulveda.cl/ . 102 K. Ehringfeld: Grubenunglück von Chile: Wie Minenarbeiter als Marketingprofi s scheitern [Mining accident in Chile: How mining workers fail as marketing professionals], loc cit. 103 http://mineromariosepulveda.cl/ . 3 The Cultural Dimension: A Nation in Search… 61

Independent of this fact, the hero construction of “Super-Mario” as such, and thus independently of his person, is likely to continue, particularly when Medavoy’s Hollywood movie “The 33” is released. The fact that no less than Antonio Banderas is playing Super-Mario in the movie will most probably give another push to Mario’s hero construction. The movie will probably focus on the tightly deﬁ ned narrative of unity, efﬁ ciency, individual heroism, and solidarity with a happy end, as in most US blockbusters.

“Nothing Is Impossible for a Chilean”

But despite all analysis, life is full of contradiction. Surprisingly to many, and in clear contradiction of the miners’ criticism of their hero construction in the media, the men themselves recently contributed to the renaissance of their public hero- image, as they acted in a commercial of the National Bank of Chile (Banco de Chile), which was the offi cial sponsor of the Chilean national team in the Soccer World Cup in Brazil in June and July 2014. The spot showed “the 33” in familiar scenery: “Camp Hope” in the Atacama desert with Mario Sepúlveda at the center of attention as the speaker of the group. After 4 years, the heroic story of Chile’s miners served once again as the perfect narrational structure to promote national unity, courage, and hope of the nation, as the advertising screenplay text of “actor” Mario reveals104 : In this place we were trapped for 71 days. We were swallowed by the earth. It was then that we had to prove what we were made of. We knew we had millions of Chileans outside who believed in us. And this very earth was witness of all that. That is why this earth we’ll take to Brazil, to the court where our football team will be training. To fi ll it with hope and courage. So we can show the world that nothing is impossible for a Chilean. Spain is diffi cult to play? The Netherlands is diffi cult? We are not scared by the ‘group of death’. We do not care about death, because we have beaten death before. 105 Probably motivated by fi nancial incentives to participate in the video, ironically the disadvantaged and disappointed miners themselves contributed to Chile’s “pure” image of national unity and success; and they reminded the international community of its “glorious” story, which in reality, as they themselves claimed, ignored the real-life situation of the workers. In the commercial, the miners try to live up to their own myth and play the unshaken heroes who never changed their minds. In reality though, the overall narration would rather deserve a title like: “The short way up and the long way down”.

104 Ofﬁ cial commercial of Chile’s national team for the Football World Cup in Brazil 2014 in cooperation with the Bank of Chile: https://www.youtube.com/watch?v=pK9fhilMLW8 . 105 Sportingnews: Chilean miners star in inspiring World Cup commercial. Transcription and translation of the spot, May 29, 2014, http://www.sportingnews.com/soccer/story/2014-05-29/ world-cup-2014-chile-miners-commercial-chilean-national-team-bank-of-chile-ad-advertise- ment-brazil . 62 R. Benedikter et al.

Chilean Media “Reality Shows” and Media Politics: Both Proved Similarly Volatile

As mentioned, Chile has sometimes been branded a “spineless democracy” or a popular will in slumber, often interpreted as a legacy of the shock effects of the Pinochet dictatorship. But from May 2011 on, massive demonstrations—the largest since the return of democracy in 1990—created a critical counter-opinion within the Chilean population against the myths of identity and unity launched by the government, promoting instead the image of a highly separated and frustrated society under great economic pressure. As mentioned, the spark spread from the student movement, which demanded structural reforms and a more active role by the state in the regulation of the increasingly proﬁ t-oriented and unequal Chilean educational system. These protests soon overlapped with other “alternative” activisms, and the subsequent fate of several protagonists of the “miracle of Atacama” contributed to the shattering of the internationally promoted narrative of Chile’s ﬂ awless success. Interestingly, among the (media) cases to be considered in this regard are not only those of the miners, but also that of an extraordinary mainstream politician who rose like a rising star because of the “happy myth” of the “miracle of San Josè”: mining minister Laurence Golborne of Piñera’s center-right coalition. As his case shows, both Chilean media “reality shows” like the one constructed around the rescue action and the miners and media political fates prove to be equally insecure, ambiguous, and volatile in the Andean state.

The Case of “Miner 34”, Laurence Golborne: A Star Rises and Falls

Before starting his political career under the Piñera administration in 2010, the Stanford University-educated economist Laurence Golborne was CEO of several companies in the energy sector, CEO of the sales chain Ripley , and CEO of CENCOSUD, South America’s biggest multinational enterprise, a publicly traded retail company. Due to his many years of standing cooperation with the expansion of CENCOSUD, the mining minister has often been described as the right hand of Horst Paulmann,106 considered the third-richest person in today’s Chile, just one rank above former president Piñera. When Golborne assumed the ofﬁ ce of mining minister in 2010 he wasn’t an expert in mining at all, but most other ministers in the world aren’t experts of their resorts either. Golborne could compensate—as he said—his “lack of expert knowledge” with outstanding “business leadership experience” thanks to his former career

106 M. Serrano: El ascendente camino del hombre clave de Paulmann. In: El Mercurio, July 14, 2007. 3 The Cultural Dimension: A Nation in Search… 63 as CEO of multinational companies. 107 A year after the “miracle of Atacama” rescue operation (in 2011), Golborne, who in the framework of the operation had become one of Chile’s most popular politicians, refl ected on leadership topics in an interview with the Washington Post , stating: I understood when I arrived there [at the place of the mining accident] that it was a very highly complex situation, especially from the human side. The families—the relatives of the miners—were asking for answers, asking for news. There was a lot of pain and anguish because of the situation in which they were living. In this case, the situation had uncertainty and pain, and we had to manage it. I am very proud of the way we established a relationship with those families based on trust. That was the key. We established, in the very beginning with the families of the miners, a relationship based on trust and truth.108 And with regard to the question of what good leadership means to him, he replied: I always say that the main characteristic of a leader is to learn how to listen, how to listen to people and then make decisions. Try to understand the problems and then fi nd solutions. Try to understand what’s going on, what you can do. Try to understand what people need— this is the key. 109 The “miracle of Atacama” had not been Golborne’s fi rst encounter with the mining workers unions; and he quickly gained a reputation for his straight policy in dealing with the notorious security problems reported by them. On 1 July 2010, Golborne met the mining union of Copiapó (CUT Copiapó) and was warned about the unsafe conditions of the San Jose mine, which ultimately provoked a miner’s strike. On 3 July 2010, the fall of a slab in the San José mine caused the amputation of a workers’ leg. On July 5, Javier Castillo, Chile’s mining union leader, visited the ministry of mines, but was not received by Golborne. However, according to the leftist commentary and analysis magazine allegedly close to the interests of the miners, Red Diario Digital , Castillo left a memorandum documenting his concern about the conditions of the San José mine, via the secretary of the head of cabinet. On July 30, 2010, a report from the Chilean Labor Department warned of serious defi ciencies in the safety of the San José deposit, implying a clear and present danger to life and physical integrity of workers. Yet the minister did not take any concrete action.110 Although starting his political agenda as a controversial fi gure, Golborne gained tremendous popularity through the subsequent management of the “miracle of Atacama” crisis.

107 M. Steffan: One year after the Chilean mine rescue, Minister Laurence Golborne reﬂ ects on leadership under pressure. In: The Washington Post, October 10, 2011, http://www.washingtonpost.com/national/on-leadership/one-year-after-the-chilean-mine-rescue-minister-laurence-golborne-reﬂ ects-on-leadership-under-pressure/2011/10/10/gIQApiY3ZL_story.html . 108 Ibid. 109 Ibid. 110 F. Herreros (translated by Roberto Navarrete): Comment & Analysis: Chile’s Trapped Miners: The Untold Story of a Tragedy with a Happy Ending, loc cit. 64 R. Benedikter et al.

Nevertheless, voices which referred to his controversial role after the accident grew louder when several investigations started to draw a different image of the mining minister. Golborne’s bright prospects of becoming Piñera’s successor as Chilean president after the elections of November–December 2013 were destroyed within only fi ve days by embarrassing to disastrous Chilean media revelations in April 2013. As journalist Benjamin Witte strikingly stated, Golborne went from golden boy to goat in a span of just fi ve days.111 That hit Chile’s center-rightist Alianza’s chances of winning the general elections like a storm. First, on 25 April 2013, Chile’s Supreme Court resolved a long-pending class action against CENCOSUD, which dated back to 2006, when Golborne had been serving as CEO of the company and decided to increase service charges for users of one of its super market-chain credit cards (“Jumbo Más”). The customers found the fee hike by the retail giant unnecessary and abusive.112 The background is that in the Chilean fi nancial sector formal complaints against banks rose by 139 % between August 2011 and August 2012, with more than 27,000 appeals between May and August 2012.113 Chile’s Supreme Court found CENCOSUD to indeed have crossed the legal borders and ruled that the company must compensate the group of affected costumers to the tune of US$70 million.114 Cencosud’s conviction came only a month after Chile’s fourth-largest retail store, La Polar, was forced to compensate its customers US$685 million in reparations.115 Both these court decisions of 2013 were undoubtedly “cultural” side effects of Chile’s social protest movement since the 2000s, and in particular since 2011, which had constantly criticized the structural problems of indebtedness and abusive practices in the Chilean fi nancial sector. Golborne, on the other hand, fi rst commented on the court’s ruling, stating: It doesn’t seem abusive to me.116 Later though he stated under increased media pressure that he was only following orders from above—not a very satisfactory explanation for a general manager who was supposed to be at the top of the hierarchy in entrepreneurial decision- making of

111 B. Witte: Chile’s Reeling Right Makes Sudden Candidate Switch. In: Blog of journalist Benjamin Witte, June 7, 2013, http://benwitte.wordpress.com/2013/06/07/chiles-reeling-right- makes-sudden-candidate-switch/ . 112 Ibid. 113 Servicio Nacional del Consumidor SERNAC: Estudio: Reclamos contra bancos aumentaron 139% en segundo cuatrimestre de 2012, 19 de noviembre de 2012, http://www.sernac.cl/ estudio-reclamos-contra-bancos-aumentaron-139-en-segundo-cuatrimestre-de-2012/ . 114 The Santiago Times: Chilean retail giant forced to hand out an estimated US$70 million, April 26, 2013. 115 Ibid. 116 B. Witte: Chile’s Reeling Right Makes Sudden Candidate Switch, loc cit. 3 The Cultural Dimension: A Nation in Search… 65 diverse internationally active enterprises, and even less for a “hero minister” responsible for one of the key industries of the nation, the mining industry, and an aspiring new president for a “morally uniﬁ ed” and nationally “integrated” country as a whole.

Some Indecent News

Second, only 2 days after the media revelations about Golborne’s involvement in the CENCOSUD scandal, some of the minister’s personal deposits were found in the British Virgin Islands, a territory listed by the OECD as a fi scal paradise, from where noticeable amounts were allegedly transferred to one of Golborne’s companies in Chile. This revelation was linked to the appearance of Offshore -Leaks , a platform publishing confi dential fi les on the global impact of offshore investments. Some experts called it “the biggest hit against international tax fraud of all times”, 117 involving more than 2.5 million secret records of offshore assets of people from 170 countries and territories, who are considered responsible for the “tax-disappearance” of 21–31 trillion dollars worldwide. Eighty-six journalists from 46 countries were part of the respective investigation including the Washington-based International Consortium of Investigative Journalists (ICIJ) and other international media such as the BBC , The Guardian , The Washington Post , Le Monde, and the Süddeutsche Zeitung. The Guardian London commented: Millions of internal records have leaked from Britain’s offshore fi nancial industry, exposing for the fi rst time the identities of thousands of holders of anonymous wealth from around the world, from presidents to plutocrats, the daughter of a notorious dictator and a British millionaire accused of concealing assets from his ex-wife. The leak of 2m emails and other documents, mainly from the offshore haven of the British Virgin Islands (BVI), has the potential to cause a seismic shock worldwide to the booming offshore trade, with a former chief economist at McKinsey estimating that wealthy individuals may have as much as $32tn (£21tn) stashed in overseas havens. 118 As it was an international investigation, the news about Golborne’s offshore activities didn’t initially come to light in Chile, but were tweeted from Spain by Chilean journalist and the director of the Spanish newspaper El Mundo , John Müller.119 Chile’s mining minister tweeted back, calling the accusations an “attack on his honorability.”120 But the damage was done, and the media pressure fi nally

117 D. Leigh: Leaks reveal secrets of the rich who hide cash offshore. In: The Guardian, April 3, 2013, http://www.theguardian.com/uk/2013/apr/03/offshore-secrets-offshore-tax-haven . 118 Ibid. 119 B. Witte: Chile’s Reeling Right Makes Sudden Candidate Switch, loc cit. 120 Ibid. 66 R. Benedikter et al. forced the “miner 34” Golborne to offi cially withdraw his presidential candidacy on 30 April 2013.121 On an international level Golborne suffered less political damage, as his following career showed. The Organization for Economic Cooperation and Development (OECD) required the election of a new Chilean representative in 2013. President Piñera suggested a fi gure who—at least at that time domestically was not considered by all a suitable candidate—for the offi ce: Laurence Golborne. Leopoldo Lavín accordingly stated in Chile’s media publication El Ciudadano : If someone, who should be investigated for exactly these types of crimes, is gifted as a consolation prize the offi ce of the representative of Chile in the OECD, an organization, which actually focuses on the elimination of these practices, this is a piece of perfect non- sense that transforms the government of Chile into a clown. 122 In the end, Golborne didn’t get the post. He in essence returned to where he came from: Since May 2014 he is in the directorate of RIPLEY, a private enterprise, as “independent director”.123

The “33 of Atacama” and the National Political Effects of Chile’s “Reality Show” in the Media

Marta Lagos, founder of the Santiago-based private non-proﬁ t public policy analysis organization Latinobarómetro —which conducts comparative surveys about democratic, economic, and societal developments in 18 Latin American countries representing more than 400 million people—commented in the Chilean alternative media trust cambio21 on the “accident of San José”: This story (of the miners rescue) was a gift from heaven to the (conservative) government, because it’s a matter of leadership […] This should be the most authentic I’ve seen in the last ten years. Never before has a person who is not the president received so much media attention. And this is the reason why Piñera wanted to capitalize it and take the triumph, as it was his own. This is called doing (Chilean) politics.124

121 Emol—El sito de noticias: Golborne tras bajar candidatura presidencial: “Trataré de seguir aportando al país”, April 30, 2013, http://www.emol.com/noticias/nacional/2013/04/30/596165/ golborne-tratare-de-seguir-aportando-a-nuestro-pais.html . 122 L. Lavín: El caso Laurence Golborne, la OECD, Le Monde y la evasión tributaria. In: El Ciudadano, July 30, 2013, http://www.elciudadano.cl/2013/07/30/75346/el-caso-laurence- golborne-la-ocde-le-monde-y-la-evasion-tributaria/ . 123 T. Flores: Laurence Golborne ingresó al directorio de Ripley. Fue propuesto por el controlador como director independiente. Tonda no logró los votos. In: La Tercera, 02 de Mayo de 2014, http:// diario.latercera.com/2014/05/02/01/contenido/negocios/10-163508-9-laurence-golborne-ingreso- al-directorio-de-ripley.shtml . 124 Cambio21: Tragedia minera de Copiapó se convierte en “reality show” por acción de los medios de comunicación. September 05, 2010, http://www.cambio21.cl/noticia.php?noticia_id=21856& categoria_id=54 . 3 The Cultural Dimension: A Nation in Search… 67

Despite the disputed question of what “authentic” may (and can) mean in today’s globally mediatizised political landscape, there was a concretely measurable political effect of the accident. It is refl ected in the rating and approval rates of the politicians involved. The effect of “the 33 of Atacama” had lifted Piñera’s approval points to the maximum of his legislature (2010: 63 % 125 ), right after the successful rescue of the miners. The effect was even stronger and more existential for those that were almost unknown before the accident. In July 2010, only 16 % of the Chilean population knew mining minister Laurence Golborne, and he was the least approved member of Piñera’s newly constituted cabinet. 126 But from the moment when it became known that the trapped miners were alive, Golborne covered more front pages of newspapers than the president himself, and the mining minister temporarily reached a historical record approval of 91 %.127 In September 2010, 51 % of Chileans could identify with Golborne, who reached the top of the minister’s ranking with a 78 % approval rate.128 In consequence, Golborne even left the strictly sectorial domains of “right” and “left” and was gifted to become a “national fi gure” dignifi ed to be a “presidential alternative” underscoring his “out-of-habit” or (alleged) “meta-party” achievements. For some international observers, the handling of the accident had even become a symbol of a “new form of governance”. Indeed, the self-enactment of Piñera and Golborne in (and by) the media re-shaped their public image from elitist, super-rich, rational, and power-hungry businessmen towards a more balanced picture including “natural leadership”, empathy, emotional commitment, and humanism. At the same time, criticisms of the reporting about “the 33” came from the progressive, often leftist inclined Chilean media. In their view, the story starkly followed the “cultural” rules of a “reality game” show in favour of the government in charge.129 They asserted: There is a locked-in group at the depth of 700 m and a camera fi lms the personal change of each member of that specifi c “society” under the ter- rifying conditions in a buried mine. But in contrast to a “real” “reality-show”, there is neither an explicit agreement by the main actors to channel the pictures nor a stipulation of payment.130 It is a kind of unpaid public circus.

125 The Economist: How the mighty have fallen, June 14, 2011, http://www.economist.com/blogs/ americasview/2011/06/chiles-politics . 126 Cambio21: Tragedia minera de Copiapó se convierte en “reality show” por acción de los medios de comunicación, loc cit. 127 Ibid. 128 Ibid. 129 El Ciudadano: 33 mineros y sociedad del espectáculo a la chilena. October 15, 2010, http:// www.elciudadano.cl/2010/10/15/27670/33-mineros-y-sociedad-del-espectaculo-a-la-chilena/ . 130 Die Zeit: Chilenische Bergleute: Das Unglück als Medienereignis [Chilean miners: The tragedy as media event], October 13, 2010, http://www.zeit.de/gesellschaft/zeitgeschehen/2010-10/chile- mine-medien . 68 R. Benedikter et al.

As a consequence, the moral ambivalences of the mediatic “hero” construction as well as the information revealed through the reporting format of “reality TV” have been at the center of ethical debate and concern in the Chilean intellectual and public sphere for years. Speaking in non-partisan ways, there were probably indeed a certain number of images and videos from inside the mine with unknown criteria of selection overex- posing the victims and their families. The reporting in most cases focused on the personal stories of the miners, their biographies, and their individual fates in order to “emotionalize” the spectator by the means of the tragedy. For Chilean author and psychiatrist Marco Antonio de la Parra the miners are reality boys (chicos reality ). The prolongued mediatic exposure is more toxic than tobacco or radiation. Their world is now entering the state of exception, so strange to become a national ﬁ gure, a mediatic hero. If they could stand it, this would be another challenge to their integrity and character. 131 Parra added, that the topic ceases to be informative and becomes insane by transforming human suffering into circus. […] Today the TV doesn’t understand reality. The spyhole and hidden camera has triumphed. […] In fact, the entire country has become locked into an imagined reality recently.132 Finally, this rather one-sided reporting on the emotions in the secluded microcosm of the mine paved the way to downgrade the bigger societal macrocosm—i.e., the working and security conditions in the mine of San José and in the Chilean mining industry in general, and the inequalities in the Chilean political and social system. Or as Marta Lagos critically described the general mechanism in play: We are a monothematic country, and the main responsible for this overexposure is the media which ﬁ nds ‘news’ in everything that is occurring.133

A surprising Turn: President Piñera—A “Micro-Manager” Loved by Europe, But Secretly Depreciated by The US?

Interestingly, the popularity of Piñera went up and down since the accident in 2010. It reached a maximum with the miners accident (October 2010: 63 % 134) and arrived just 1 year later at the low point of his mandate, linked to the social explosion of the student protest movement (August 2011: 27 %135 ).

131 Publimetro: Polémica por videos: ‘Los mineros ya son chicos reality’, September 3, 2010, http://www.publimetro.cl/nota/cronica/polemica-por-videos-los-mineros-ya-son-chicos-reality/ xIQjic!CiIVLf4mCGVw/ . 132 Ibid. 133 Cambio21: Tragedia minera de Copiapó se convierte en “reality show” por acción de los medios de comunicación, loc cit. 134 Adimark: Evaluación de Gobierno, October 2010, http://www.adimark.cl/es/estudios/archivo. asp?id=77 . 135 Adimark: Evaluación de Gobierno, Agosto 2011, http://www.adimark.cl/es/estudios/index. asp?id=130 . 3 The Cultural Dimension: A Nation in Search… 69

Without doubt, one reason for this exceptional volatility was that throughout his mandate Piñera was known in his home country for his sometimes “strange expressions” and “slips of the tongue”. For example, the Harvard-educated Piñera publicly claimed Robinson Crusoe, the hero of Daniel Defoe’s novel, to be a real person who in his opinion lived for 4 years on the Juan Fernandez Islands, which belong to Chile. 136 In 2010, the president declared one of Chile’s most famous poets, the living Nicanor Parra, as dead, and later awarded the poet with the Pablo Neruda Ibero-American Poetry Prize in 2012. 137 Piñera’s verbal errors—or his “verbal incontinence”, as senator Jovino Novoa called it in The Santiago Times 138—as well as some of the fabulous stories he told while in offi ce led to the expression “Piñericosas” or “Piñerías”, which became the subject of a Wikipedia article widely popular in South America.139 Some Chilean intellectuals who followed the series of Piñera’s “uncommon” public declarations over time eventually asked to which degree the “Piñerías” were (a) Merely “human failures” of an otherwise particularly well-educated president (b) Clever defection strategies of unimportant linguistic errors to keep the media attracted, preoccupied, and most important, occupied? Be it as it may, the effect of both options resulted to be the same. Irrespective of approval rates, Piñera remained at the center of heightened personalized media attention throughout his offi ce. It is an unwritten law in contemporary mediatized politics that it is less important in the long term what is said by and about a media fi gure, but that it is said, and that this fi gure is present in the media, most probably not only through textual contributions, but also through images, occupying the public imagination as much as possible. But an exceptional event modifi ed this media game as it is not uncommon in the course of political careers. After Piñera’s victory in the run for the presidential offi ce in 2010, the whistleblower platform Wikileaks published a secret letter from the US-Embassy in Santiago de Chile to Washington DC. Subject: “Meet Chile’s President-Elect, Sebastian Piñera”, dated 22 January 2010. The message contained personal and professional opinions of US diplomats on the new Chilean president’s style of leadership. Rather undiplomatically, it stated: A shrewd businessman, Piñera seeks any advantage possible in business or political dealings, often getting close to the limits of ethics or legality. […] Piñera makes high demands on his staff but rewards loyalty. In remarks to close advisors at an election night party, he told them that he would need their intelligence, hard work, and obedience.

136 El Mostrador: Piñera ‘mata’ a Nicanor Parra y dice que Robinson Crusoe existió. April 24, 2010, http://www.elmostrador.cl/pais/2010/04/24/pinera-mata-a-nicanor-parra-y-dice-que- robinson-crusoe-existio/ . 137 Ibid. 138 M. Coleman: Defense minister ‘future president’ of Chile, says President Piñera. In: The Santiago Times, August 27th, 2012, http://santiagotimes.cl/defense-minister-future-president-of- chile-says-president-pinera/ . 139 Wikipedia article: “Piñericosas”, http://es.wikipedia.org/wiki/Piñericosas . 70 R. Benedikter et al.

A micro-manager, he wants to be in control of every detail, from the content of a speech to the camera position and lighting. Press reports have speculated that he may make life diffi cult for his cabinet members given his broad knowledge and hands-on leadership style.140 This may certainly be an unfair evaluation of both the Chilean president and the person. But such direct, if not brutal, judgements seem not to be the exception in the reality of international relations, as we have learned during the past few years from cases, to mention just one, such as the unexpected “Fuck the European Union” sentence of the US Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland in January 2014.141 Behind the curtains and in “realpolitik” things appear, much more often than expected by the public, single-faceted and do not respect differentiated views, political praise, or cultural myths. In addition, catastrophes such as the mining accident seem to bear the particular characteristic of evoking deeply rooted human instincts because of their archaic dimension of being buried alive, of darkness, and enclosure, such that they almost always create highly volatile socio-political situations. They can be both a “heavenly gift” to rulers and simultaneously a profound threat to them, as the mining catastrophe in Soma, Turkey, has proven to be for Turkey’s long-popular Prime Minister Recep Tayyip Erdogan in May 2014.142 Thus, regarding Piñera’s political style of “micro-management”, rather than bashing his personal style during the incident, apparently effective in its own way (every politician has his or her own style, none is comparable to others, and particularly in democracies there is no uniformity), it may be more interesting to evaluate the president’s behaviour after the miracle of Atacama. Despite heavily capitalizing on the event for political benefi t, and although allegedly controlling every single issue in detail, there seems to be no well-documented trace of far-reaching reforms regarding security standards, compensation, or benefi ts for the miners. The essence of Piñera’s commitment in the aftermath of the accident seems to have been centered on media representation of conservative values, rhetorics of consolation, encour- agement and hope, and on continuing to create the image of a unifi ed and united country under his leadership. In other words: Piñera’s speeches and statements seem to have focused more on the collective emotional aspect than on cognitive refl ection—a classical mechanism that all too often produces short-circuits in the public’s ability of critical enquiry. In essence, such a strategy would, in principle, open the door to the unconscious implementations of desires, compulsions, and fears in order to trigger convictions and behaviour.143

140 Wikileaks: Viewing cable 10SANTIAGO25, Meet Chile’s President-Elect, Sebastian Pinera, loc cit. 141 A. Gearan: National Security: In recording of U.S. diplomat, blunt talk on Ukraine. In: The Washington Post, February 6, 2014, http://www.washingtonpost.com/world/national-security/in- purported-recording-of-us-diplomat-blunt-talk-on-ukraine/2014/02/06/518240a4-8f4b-11e3- 84e1-27626c5ef5fb_story.html . 142 S. Fraser: Images of Erdogan staffer kicking protester damage Turkish PM. In: The Globe And Mail, May 15, 2014, http://www.theglobeandmail.com/news/world/erdogan-staffer-kicks-protester-further-denting-turkish-pms-image/article18679225/ . 143 S. Timsit: Las 10 Estrategias de Manipulación Mediática. In: Cubadebate, 15 septiembre 2010, http://www.cubadebate.cu/opinion/2010/09/15/noam-chomsky-y-las-10-estrategias-de-manipula- cion-mediatica/#.U47uqxZ0d-U . 3 The Cultural Dimension: A Nation in Search… 71

The Circle Closes In: In Contradiction: Piñera, “Super- Mario” and Golborne all in the Same “Reality Show” Leading up to the Presidential and General Elections of 2013

In October 2012, Piñera invited media-effective miner star “Super-Mario” Sepúlveda into La Moneda , the Chilean presidential palace, to celebrate the second anniversary of the miners’ rescue and to honour the miners’ popular leader. La Tercera TV , the TV channel owned by the infl uential newspaper La Tercera, broadcast a short, but as it turned out meaningful, video about the festivities. In this video, the different culturo-political discourses are condensed into an encompassing joint structure of narration about the accident full of contradictions and surprises. Since this video of just 2:41 min length 144 permits insights into the mechanisms of political instrumentalization of Super-Mario for the then forthcoming presidential elections of November–December 2013, in order to reach some conclusions on the case and its underlying implications, it is worth transcribing and translating it. The video consists of two parts: 1. The offi cial celebration inside the presidential palace, where Super-Mario is surrounded by the all-smiling “political family” of the center-right government under Sebastián Piñera with Mario standing right in the middle of the presidential couple. 2. The unoffi cial part after the celebrations, when the popular miner was “spontane- ously” interviewed by the media when leaving the palace. First act, offi cial part, La Moneda: Sebastian Piñera: “Why did the story of the 33 miners strike so deeply into the heart of the Chileans? And why did it infl uence the entire world? First, one could ask if it was due to the mining accident, as there are not many mining accidents in the history of Chile [apparently a statement not corresponding to the facts, author’s note] and in world history. Was it because Chile is a very well known and outstanding country? Chile is a very small nation in the remotest corner of earth. What created such a profound, transcendent and signifi cant characteriza- tion of our nation were other things. I would say, in the fi rst instance, it was faith, the whole country unifi ed in and through unshakable faith.” Super - Mario: “There is a lack of words and a shortage of time to express how many things one feels after the whole story. We Chileans sometimes forget the beautiful things that happen in our homeland and we are bad ungratefuls, too. But there is one pure thing I’m sure about, if we are not good in soccer, we are defi nitely world champions in rescue and international champions in teamwork. The truth is, dear Mr. President and Mrs. President and everybody who is working behind you, I’m proud to belong to the great path that represents my country. Viva Chile!”

144 La Tercera TV: Mario Sepúlveda sorprende ante consulta de un eventual apoyo a Laurence Golborne como candidato, accessed May 14, 2014, http://www.laterceratv.cl/index.php?m= video&v=26504 . 72 R. Benedikter et al.

Mining minister Laurence Golborne: “First of all, I would like to thank those 33 miners, who had the need and the power to survive for the fi rst 17 days under really horrible conditions and the following 53 days under hard conditions, but with the hope of rescue. I want to thank them and congratulate them for the power and the lesson of life they taught us. Secondly, I thank President Sebastián Piñera for con- ceding me the privilege to conduct the operation. In fact, for me it was a life experience, the most enriching a human being could ever live through.”145 Not a single word of the offi cial speeches addressed the origins, the responsibilities, and the legal issues of the accident, the state of affairs in the mine, or the situation of the traumatized miners. The statements, at least those for the greater public, exclusively focused on the emotional aspects of the main fi gures in order to create hero- constructions (i.e. individualized situational awareness), but missed rational refl ection and interpretation of the greater societal context (i.e. contextual eco-awareness). Second act, unoffi cial part, Super-Mario after the celebration on the street surrounded by journalists: Journalist : “What would happen, if Laurence Golborne takes on the challenge of running for next president? Are you open to collaborate with him? It is said … that he is very close to you.” Super -Mario : “Well, I believe that—after this second opportunity to live—we are prepared to work for our country. Now, who is governing and who not makes absolutely no difference to me (original “me da exactamente la misma huevada”, which means literally: “I don’t give a shit about it”), since I have to go on working.”146 This statement of Super-Mario was a huge surprise for the Chilean media, since the popular miner apparently had lost his sympathy for the “political family” of the center-right and did not spread a good word for the government. In fact, Super- Mario’s words turned out to become a very effective negative advertising for the ruling conservative “kings of miners” Piñera and Golborne, especially for mining minister Golborne who was the center-right’s best bid of retaining power after the presidential and general elections of November and December, 2013. Nevertheless, unlike Piñera and despite all odds, Golborne managed to preserve a good part of his post-miner-rescue popularity and later went, as mentioned, into the intra-Allianza presidential primary as representative of the rightist Unión Demócrata Independiente (UDI).147

Myths Rarely Solve Problems

Again, it is rather improbable that the center-left party alliance would have used strategies completely different from those applied by Piñera and Golborne. It would probably have done similar things: using the event of “the 33” in order to promote

145 La Tercera TV: Mario Sepúlveda sorprende ante consulta de un eventual apoyo a Laurence Golborne como candidato, loc cit. 146 Ibid. 147 B. Witte: Chile’s Reeling Right Makes Sudden Candidate Switch, loc cit. 3 The Cultural Dimension: A Nation in Search… 73 their values, political issues, and strategies. And although natural catastrophes by their very “nature” sometimes seem to tend to be more inclined towards promoting “rightist” values embodied in slogans like “strength”, “power”, “mobilization”, “defense”, or “national unity”, without doubt the discourse of the center-left would have been able to make the most of the accident for their own values, such as, for example, strengthening the workers unions, pointing towards inequality, demanding justice for the disadvantaged classes, and promoting their political viewpoints in a variety of day-to-day fi elds. As such, and as far as both center-right and center-left make use of socio-cultural narratives by relating them systematically to the “attention economy” of the media to promote their interests, contemporary Chile is just one example among many other modern nations that are “socially contradictory” or even “socially split”, kept together in a large part by mystifi cations and collective narratives often artifi cially created by those in power or by those who rule silently over the majority and thus are interested in stability, without much difference in the basic mechanism between right and left. It is thus possible that without the subsequent student protest movement of 2011, a veritable “alternative narration” of the accident, and more important, of Chile as a whole wouldn’t have come to the fore so rapidly after the end of the dictatorship. Given the student’s incessant public efforts since the start of the 2000s, in 2011 an open “clash of narrations” reached its fi rst peak, when the student movement temporarily broke the communication circle of the traditional media and installed a broad debate about inequality, disproportionate living costs and power abuse. The protest movement addressed a wide range of political issues that in its eyes ensure that Chile’s narrative superstructure of national unity and emotional solidarity combined with effi ciency and economic success doesn’t fi t the reality of the nation. In a similar view, Chilean psychiatrist Rodrigo Paz in 2013 stated that 40 years after the Coup d ’ État of Pinochet, Chile had become a “brutally sick country” due to a “state of anomy”, and “a collective loss of connection with the social, the moral and the valuable”.148 For Paz, mistrust of the other is reaching extreme and unknown dimensions in current Chile and creates what he calls “social zombifi cation”149 embodied by a multitude of partial and mutually isolated identities incapable of generating enduring and trustful alliances. Although Paz’s view is without doubt an extremist view, today, critical narratives that “compete” with those of effi ciency and unity contribute to broaden the spectrum of self-images that the country has at its disposal for refl ection and self- awareness. Overall, that may be called progress—and an example for other nations in Latin America, particularly those where, as in countries such as Venezuela or Ecuador where the radical left prevails, socio-cultural narratives are absorbed by the ruling bureaucratic class in a much wider and certainly more “brutal” way than in democratic Chile under Piñera.

148 A. Muga: El Diagnóstico del Psiquiatra Rodrigo Paz: “A 40 años del Golpe, Chile es un País Brutalmente Enfermo”. In: Red Diario Digital, September 25, 2013, http://www.diarioreddigital.cl/ index.php?option=com_content&view=article&id=1046:la-historia-no-contada-de-una- tragedia-con-desenlace-anunciado-&catid=36:nacional&Itemid=58 . 149 Ibid. 74 R. Benedikter et al.

A New Age of Competing Narratives About Chile by Chile

Removing the situation of increasingly competing narratives about Chile’s success story, Piñera refl ected on his mandate in his fi nal State of the Nation-speech on 16 September, 2013, concluding: As president of all the Chilean people, I can’t help but feel proud of Chile, whose achievements, which have been occurring at a time of global uncertainty, are being acknowledged and admired abroad […]. Chile is a better place nowadays to be born, to study, to work, to start a business, to form a family and to get old. To sum it up, it’s a better country to live in than it was three years ago.150 After several unsuccessful conversations with the Piñera government to get to a more pondered view of the nation’s situation, the student protest movement chose the same strategy as the president: internationalization, mediatization, and global distribution of its competing “alternative” narration about Chile, to affect the view of the nation on itself both at home and abroad. In October 2011, exactly a year after Sebastián Piñera’s Europe travels, the main leaders of the student movement traveled to Paris to hold meetings with representatives of the OECD, United Nations (UN), United Nations Educational, Scientifi c and Cultural Organization (UNESCO), and the European Parliament, among other actors. Upon their return, student leaders claimed a new legitimacy based on the support of these international organizations.151 As an effect, the student protest movement step by step became a “second” moral authority representing Chile alongside of the elected government, in turn becoming one of the most dynamic social actors within Chile in the past decades. The impact of this movement on Chile’s self-image and reality should not be overestimated; and like the former center-right government of Sebastián Piñera and—since 2014—the actual center-left government of Michelle Bachelet II, it presents its one-sidednesses, fl aws, shortfalls, and blind spots which are even more accentuated in some of the radical students’ views than in those of the governments. Nevertheless, there seem to be some indicators that seem to prove that more critical, inequality-centered culturo-political narration about Chile produced by the student protest movement is needed to a certain extent to realistically ponder the widely unbroken “emotional success story” of the government and to make it a bit more grounded in order to eventually reach “integrated” positions refl ective of a bi- or (in the ideal case) non-partisan stance toward the social identity that may best fi t— and help—the country.

150 B. Witte: Chile’s Unpopular President Delivers Final State Of The Nation Speech. In: Blog of journalist Benjamin Witte, September 16, 2013, http://benwitte.wordpress.com/2013/09/16/ chiles-unpopular-president-delivers-ﬁ nal-state-of-the-nation-speech/#more-732 . 151 D. Salinas and P. Fraser: Educational Opportunity and Contentious Politics: The 2011 Chilean Student Movement, loc cit. 3 The Cultural Dimension: A Nation in Search… 75

In fact, according to Rodrigo Paz, among the indicators of the real socio- psychological and socio-cultural state of current Chile, which are understandably seldom or never mentioned by the governments, be they right or left, are: First , Chile currently has the highest rate of depression on the globe. In 2013, 2 out of 10 Chileans had depression symptoms leading to functional incapacities. That means that depression is four times more frequent in Chile than on the global average. Second , Chile and South Korea are the only members of the OECD-countries to ﬁ nd their rates of suicide (adults and youth) growing. Third, in Chile, 3 out of 4 children report physical and/or psychological violence at home and 1 of 10 reported sexual abuse . Fourth , Chilean children start to drink alcohol and smoke marihuana at an average age of 12 (global average: 14–15). In fact, the addiction rate of children and adults is among the highest worldwide. Fifth, circa 40 % of the population consumes alcohol in health-damaging ways. Almost 5 % of the children and adults consume cocaine paste (original: pasta base , in Chile also known as Cocaína de los pobres/”poor man’s cocaine”, note by the authors) in addictive ways, and more than 10 % of the population consumes marihuana with adverse health effects. Besides , Chile has the highest rate of bullying (physical and/or psychological mistreat- ment among the young) and the highest rate of youth criminality in international comparison. Furthermore , Chile is the country with the highest rate of imprisonment on the globe. Last but not the least , in Chile the two most common reasons of death are violent ones, suicide and homicide . One of three citizens of Santiago declares to be highly stressed.152

152 A. Muga: El Diagnóstico del Psiquiatra Rodrigo Paz: “A 40 años del Golpe, Chile es un País Brutalmente Enfermo”, loc cit. Summarizing translation by the authors. Original text: “Uno: Chile es el país que tiene la tasa de depresión más alta del mundo. En la última Encuesta Nacional de Salud se logró establecer que 2 de cada 10 chilenos presentaban síntomas depresivos como para provocar algún grado de incapacidad funcional. Si uno compara eso con la estadística internacional, el promedio en estudios similares, hay 4 veces más prevalencia de síntomas depresivos en la población de chilenos adultos que en el resto de la población mundial. Dos: En todos los países de la OCDE el suicidio en niños y adolescentes, o se mantiene estable o va en disminución. Chile y Corea del Sur son los únicos países donde el suicidio en niños y adolescentes va en aumento. Tres: En la última encuesta de violencia aplicada por Adimark, 3 de cada 4 niños chilenos, declara que en su casa hay situaciones de violencia física y/o psicológica, y 1 de cada 10 niños chilenos reporta que ha sido víctima de abuso sexual. Cuatro: Chile es el país del mundo donde el consumo de alcohol de y/o marihuana se inicia más precozmente. El promedio de inicio de consumo de alcohol y marihuana y/o nicotina es a los 12 años, en circunstancias que en el mundo es entre los 14 y 15 años. De hecho las tasa de adicción en niños y adolescentes son de las más altas del mundo. Cinco: Cerca del 40 por ciento de la población de adolescentes consumen alcohol en forma perniciosa para la salud. Cerca del 5% de la población de niños y adolescentes consume pasta base de forma adictiva y más menos el 10% de la población consume marihuana en forma perniciosa para la salud. También tenemos las tasas más altas del mundo en conductas de bullying, de maltrato de niños por otros niños, para qué hablar de las tasas de delincuencia infanto-juvenil. Somos el país con la mayor tasa de internación en cárceles del mundo. La tasa de institucionalización en hogares del Sename, por situaciones de violencia intrafamiliar y otras, también es de las más altas del mundo. En Chile, las dos causas principales de muerte entre jóvenes y adolescentes, es muerte violenta, ya sea por suicidio o por homicidio. Uno de cada 3 santiaguinos se declara altamente estresado. En ﬁ n tenemos una serie de indicadores que muestran que estamos atravesando por una gravísima crisis de salud mental inédita en occidente.” 76 R. Benedikter et al.

Taken together, if Paz is right—and there are without doubt many national and international experts, politicians, and citizens who oppose his diagnosis, or ﬁ nd it strongly exaggerated— Chile’s post-dictatorial, neoliberal model of maximum indi- vidualisation fostered ways of perception that resulted in an isolated self that was ﬁ rst euphoric about its “total” freedom, but later unable to relate with, and trust in others. Over time, such a model appears to stimulate feelings of insecurity, vulner- ability, and (self-)exploitation, which can undermine the social tissue. But also, if Paz is not right and his analysis more an observation from clinical practice than an socio-cultural fact, as we would tend to believe, certain symptoms of malestar that affect larger parts of the population can’t be overlooked.

Outlook: A Nation in Search of a Non-partisan Identity

Like other Latin American nations, post-dictatorial Chile is an example of the outstanding role socio-cultural identities and narratives play in the political process of highly developed and economically progressive countries within globalized contexts. Narratives on identities present different, often contradictory political aspects, as the case of Chile shows. On the one hand, narratives are not only passive embodiments and mirrors of political moods and collective feelings, but also their active creators—and thus both a stabilizing and destabilizing political factor, not necessarily a tool of refl ection and sober understanding in order to solve problems and to integrate divided parts of societies. On the other hand, the use of socio-cultural identity narratives for partisan (rightist or leftist) political parties and their interests endangers societies to become ideologically split, and thus to regress rather than progress. Refl ecting this, Chile’s recent socio-cultural narratives feature two main aspects: First, the legislature of Sebastián Piñera 2010–2014 has proven outstanding skills in “emotional narration management” as one of its core competencies in the political day-to-day business. During Piñera’s years, political marketers have maintained a stable and highly connectable framework to embed economic and social issues into unifying and legitimizing cultural tales, if only in one-sided ways. Second, Chile in parallel has given birth to social movements that strive for an alternative socio-cultural narrative of more refl exive traits that integrates the everyday economic situation and mental state of a broader percentage of the Chilean population into the public refl ection upon what has been achieved and where the problems are. The difference between these two competing narratives could perhaps be referred to as the difference between “Ego” and “Eco”-Narratives. Both are equally legitimate and necessary for the overall development of Chilean society. 3 The Cultural Dimension: A Nation in Search… 77

In essence, the fi rst “narrative superstructure” tells a character-centered story of success, overcoming obstacles. It gives account of emotion-rich historical examina- tions faced by the means of outstanding individual qualities—i.e., it provides heroes’ stories. The second narrative, on the other hand, connects events within a more complex, problem-ridden context. It tries to describe a story of how to proceed from systemic imbalance to greater balance. It is not about a hero, but about advancing a system or network of relations. Considering this, what do we have to expect from Chile in the coming years? Will an overarching, integrative, non-partisan narrative that connects Ego- and Eco- aspects become eventually possible, given the divides present in current Chilean society? The fact is that there are at least three systemic divides in play today as the mining accident in Atacama showed: 1. The social divide refl ects the gap between self and other (inequality and exploitation). 2. The ecological divide is expressed by a gap between self and nature (environmental destruction through resource extraction). 3. The emotional divide is manifest in a split between the neoliberal “strong self” and its reality shadow (burnout and depression), which points to a contradiction between image and reality. Sure enough, the search for a new, perhaps again only transitory, but more sustainable integrative identity with the ability to overcome these three divides is a core social process in current Chile. It is a process that involves a dialogue between competing narratives and myths. This process is certainly not only Chile-specifi c. Many other nations in the current constellation face the same task.153 Be that as it may, the challenge ahead for Chile is the development of an integrative and non - partisan identity capable of including both sides and cultivating a more balanced narrative that highlights both individual and systemic issues of rightist and leftist inclinations in the given societal context.

153 Cf. The Hufﬁ ngton Post: Davos: Mindfulness, Hotspots, and Sleepwalkers. January 26, 2014, http://www.huffingtonpost.com/otto-scharmer/davos-mindfulness-hotspot_b_4671062. html?1390786785&utm_hp_ref=fb&src=sp&comm_ref=false#sb=5484308b=facebook . Chapter 4 The Political Dimension: Chile After the Presidential and General Elections of 2013—What Future?

Roland Benedikter , Katja Siepmann , and Miguel Zlosilo

December is springtime in Santiago de Chile. Although not all of the 3.2 million citizens of Santiago would agree due to the notorious traffi c jams, pollution, and congestion characteristic of every Latin American metropolis (and of most other “global cities” in the world), 1 every year the season turns the Santiago megalopolis into one of the most charming places in the world. It is not by chance that Chile’s capital was ranked as number 1 of the world’s “best places to go” by the The New York Times in 2011 for its booming modern music, art, and culinary scenes,2 and 3rd of “the world’s most loved cities” by CNN in 2012 for being South America’s version of every fi ne North American left coast city—except with nicer weather (than Vancouver), happier music (than Seattle), sexier cafés (than Portland), better bar hours and caipirinha prices (than L.A.), and cooler-looking people in gray suits and shades (than San Francisco).3 But between November and December 2013, i.e. during the fi nal stages of the sixth post-dictatorial presidential and general elections on Sunday, November 17th, and the runoff elections for presidency on Sunday, December 15th, there seemed to

1 S. Sassen: Cities. In: H. K. Anheimer and J. Juergensmeyer (ed.s): Encyclopedia of Global Studies, 4 Volumes, SAGE 2012, Volume 1, pp. 181–185. 2 The New York Times: The 41 places to go in 2011, January 7, 2011, http://www.nytimes. com/2011/01/09/travel/09where-to-go.html?pagewanted=all&_r=0 . 3 J. Rayne: World’s 10 most loved cities. In: CNN, 8 June 2012, http://travel.cnn.com/explorations/ life/10-most-loved-cities-068149 . R. Benedikter (*) University of California , Santa Barbara , CA , USA e-mail: [email protected] K. Siepmann • M. Zlosilo Opina Market Research Institute , Santiago , Chile e-mail: [email protected]; [email protected]

© Springer International Publishing Switzerland 2015 79 R. Benedikter, K. Siepmann (eds.), Chile in Transition, DOI 10.1007/978-3-319-17951-3_4 80 R. Benedikter et al. be a chance for a political spring time for Chile too—after a long “winter of discontent”4 in the shadow of former dictator Augusto Pinochet (1915–2006, dictator from 1973 to 1990). To be sure, this “winter” had nothing do to with the post-dictatorial governments since 1990, all but one run by center-left parties: the exception being the conservative government led by Sebastián Piñera (2010–2014). All post-Pinochet governments fostered the development of Chile towards a pluralistic democracy; and for that sake all of them built far-reaching bi-partisan agreements between government and opposition on important issues like economic policies. But they did so through often silent, private, and intransparent “politics of agreements” between the alliances of the left and the right occurring often by the means of personal friendships seen as poorly democratic or even undemocratic by many citizens. In addition, Pinochet continued to cast his shadow over the country with the institutional and legal mechanisms he left as his legacy to the young democracy: the leyes de amarre , or laws keeping things tied up : The current political system of Chile was designed in 1980, under the 1973–1990 dictatorship of Augusto Pinochet who died in 2006, and is perpetuated by the ‘leyes de amarre’, or ‘laws keeping things tied up’, incorporated in the 1980 constitution, which with minor modifi cations is in force to this day.5 In fact, Pinochet left the country with a constitution favouring the status quo— a strongly hierarchical and elitist economic and political system—and the unoffi cial association of wealthy families through the so-called “binomial” electoral system. The “binomial” system is the complex mechanism by which members of the Chilean parliament are elected. It is intended to guarantee that not too many changes in a system based on stability rather than on participation would be possible.6 Over the past decades, the “binomial” voting system has been a factor dedicated, with more or less success, to ensure that, as Pinochet allegedly put it in his last days in offi ce, “democracy is not taken too far”.7 Thus, due to the political, constitutional, and institutional legacy of its dictatorial past and despite its remarkable development, Chile has been often considered an “unfi nished democracy”.8

4 N. Olle: Chile’s Long Winter of Discontent. In: The Global Mail, April 17, 2012, http://static. theglobalmail.org/feature/chiles-long-winter-of-discontent/193/ . 5 M. Jarroud: Chileans Disillusioned with Pinochet-Era Political System. In: IPS News Agency, January 30, 2012, http://www.ipsnews.net/2012/01/chileans-disillusioned-with-pinochet-era- political-system/ , 6 M. Jarroud: Pinochet’s Policies Still Rankle in Chile. In: IPS News Agency, September 11, 2013, http://www.ipsnews.net/2013/09/pinochets-policies-still-rankle-in-chile/ . 7 The Economist: Bye-bye binomial?, February 22, 2012, http://www.economist.com/blogs/americasview/2012/02/chiles-electoral-system . 8 The Economist: Chile’s Unﬁ nished Democracy. General Pinochet’s return shows how much the country needs constitutional change, March 9th, 2000, http://www.economist.com/node/289679 . 4 The Political Dimension: Chile After the Presidential… 81

“The Only Real Enemy of Chile Is Inequality”

As a consequence, for many, particularly the younger generation, independent of party affi liation and ideological conviction, political spring in 2013 was overdue in a country characterized for decades by the combination of “post-Pinochetism” with a literal interpretation of neoliberalism that over time produced great national wealth, but also the most accentuated inequality of all 34 Organisation for Economic Cooperation and Development (OECD) countries, according to 2014 estimates.9 As an echo of this constellation, shortly after her election in December 2013, new-old president Michelle Bachelet programmatically stated that the only real enemy of Chile is inequality.10 There seem to be reasons for such a view. For example, most contemporary observers would agree that … the current Chilean education system exacerbates existing inequality. The country’s Gini coeffi cient (which measures income distribution) stands at 0.49 (on a scale of 0 to 1), the highest of all members of the Organization for Economic Cooperation and Development (OECD). In addition, the gap between the average university tuition and the average income per person in Chile is the largest among OECD countries. 11 Consequently, refl ecting Bachelet’s statement, New York University’s Jorge Castañeda stated that … it can be said that much of Latin America has arrived: it is democratic, with a slight but growing majority of its people prosperous, competitive and possessing international ambitions … But reducing poverty and building broad middle classes do not automatically reduce inequality. The statistical measures of inequality known as Gini coeffi cients have begun to fall slightly in Latin America, but remain the highest in the world, with the wealthiest 1 percent, 5 percent, or 10 percent of the population controlling incredibly high shares of total wealth or income. In Brazil, Chile and Mexico, which together account for nearly 70 percent of the region’s GDP and population, the wealthiest 10 percent held an average of 42 percent of national income in 2008–9; the equivalent fi gure for the United States was 29 percent. This is why hundreds of thousands of Chilean students have brought their country’s government to a virtual standstill in 2011, even though Chile is the most successful Latin nation by any economic or social standard …

9 OECD: Society at a Glance 2014 Highlights: Chile. OECD Social Indicators, http://www.oecd. org/chile/OECD-SocietyAtaGlance2014-Highlights-Chile.pdf . 10 The Economist: A political futbol. Michelle Bachelet’s struggle to combine equity and growth in Chile, April 5th, 2014, http://www.economist.com/news/americas/21600133-michelle-bachelets- struggle-combine-equity-and-growth-chile-political-futbol . 11 J. Durrett: Students change political debate leading up to Chilean elections. In: Council on Hemispheric Affairs (COHA) Washington DC, June 28, 2013, http://www.coha.org/ students-change-political-debate-leading-up-to-chilean-primary-elections/ . 82 R. Benedikter et al.

Indeed, the historic inequalities that linger have produced singular traits of national character, handed down between generations, that must change if these societies are to continue equalizing their wealth and realizing their promise. Chilean insularity […] (is) being slowly shed. And that is good; these traits should be jetti- soned completely if these societies ever hope to achieve the level of equality for which the United States has been their model.12 Apparently, the basic mechanisms of inequality that French scholar Thomas Piketty noted in his widely discussed “Capital in the twenty-fi rst century”13 of 2014 are also in play in today’s Chile: the returns on capital and wealth are growing faster than the GDP and the increase in wages and infl ationary adjustments. Nevertheless, there are both national and international voices that hold the opposite view and continue to quote Chile as the contemporary example of timely neoliberal strategies toward equality through “capital-ownership for everybody”: In Chile, workers, through their pension accounts, own assets equal to approximately 60 percent of the country’s GDP. As José Piñera, the architect of Chile’s successful pension reform, points out, personal accounts ‘transform every worker into an owner of capital’. 14 The assertion here is that given that every Chilean worker is obliged by law to pay into private pension funds, the country will eventually become a nation of capital-owners, thus making literally everybody a capitalist in his and her own right and letting the masses benefi t from the accumulation of capital as never before in the history of Latin America: If returns on capital are […] superior to the growth of GDP and wages […], then short- and medium-term fl uctuations are a detail. They can be managed through classic diversifi cation […] Social Security can be divided into a minimum tax-fi nanced guarantee augmented with personally owned, professionally managed investments. Nations such as Chile with capital- ized pension systems have employed these and other approaches with little fuss and much success.15 In open contradiction to such a view, Sebastián Piñera, later president of Chile, said during a televised presidential race debate in 2006: Chile’s social security system requires deep reforms in all sectors, because half of Chileans have no pension coverage, and of those who do, 40 percent are going to fi nd it hard to reach the minimum level. This has to be confronted now … 16

12 J. G. Castañeda: What Latin America Can Teach Us. In: The New York Times, December 10, 2011. http://www.nytimes.com/2011/12/11/opinion/Sunday/on-the-middle-class-lessons-from-latin- america.html?pagewanted=all&_r=0 . 13 T. Piketty: Capital in the Twenty-First Century, Harvard University Press 2014. 14 M. Tanner: Piketty gets it wrong. Instead of berating capitalists, we need to make it easier for workers to join their ranks. In: National Review, April 23, 2014, http://www.nationalreview.com/ article/376304/piketty-gets-it-wrong-michael-tanner . 15 T. Worstall: Intellectual Judo Or The Best Argument Yet About Thomas Piketty’s On Capital. In: Forbes Magazine, April 8, 2014, http://www.forbes.com/sites/timworstall/2014/04/08/intellectual- judo-or-the-best-argument-yet-about-thomas-pikettys-on-capital/ . 16 S. Rohter: Chile rethinks its privatized pension system. In: The New York Times, January 10, 2006, http://www.nytimes.com/2006/01/10/world/americas/10iht-chile.html?_r=3& . 4 The Political Dimension: Chile After the Presidential… 83

One resulting action was the pension reform in 2008 branded by many as classical expression of neoliberal views. There are other aspects in the discussion about inequality and the political and economic reforms required to create a new “spring” in Chile that the political and socio-economic debate has insuffi ciently addressed in recent years: Extreme inequality does not just consist of inequalities of income and wealth, but also of unequal access to land and to key public services such as education, social security, and healthcare. Regional labour markets are key factors in the generation of various dimensions of social inequality and act as a ‘primary stratifi cation device’ […] in relation to income distribution and access to social security systems, life chances, ethnic and gender disparities, or spatial discrepancies (city/countryside), all of which represent powerful ‘horizontal inequalities’.17 Although Burchardt and Weinmann referred to the situation outside the OECD and thus in principle not including Chile, their overall analysis seems to be so strikingly appropriate to Chile’s current situation that we decided to include their research into our assessment of the Andean nation. As in other Latin American countries, in retrospect much of the discussion about social reforms of the Piñera years has been about making the existing social systems more effi cient (for example, the pension funds) and about improving vertical mobility, i.e. meritocracy and career opportunities, while widely neglecting concrete measures towards greater horizontal equality, i.e. reforms of systemic inequalities.

Toward an Era of Reforms? Coalitions Between the Established Parties and the Student Protest Movement

Whether Bachelet’s analysis that the problem of inequality needs to stand at the center of political reform and innovation in Chile’s present situation is right or not, fact is: While today’s Chile is regarded as a progressive democracy with a high degree of inequality, i.e. as a politically modern open system with inherited social problems, many domestic and international observers regard the political transition of the country from dictatorial to fully democratic institutional patterns in itself as not yet completed, but rather two thirds of the way there—and claim that exactly this political dimension is one of the main reasons for inequality.18 If this is right, it would follow that inequality is not only produced by the economic and ﬁ nancial, but also by the political system of the Andean state. Again, there are some reasons for such a view. Although the present Chilean constitution was seriously reformed in 2005, some main features stemming from the Pinochet

17 H. J. Burchardt and N. Weinmann: Social Inequality and Social Policy outside the OECD. A New Research Perspective on Latin America. Kassel University, International Center for Development and Decent Work (ICDD) Working Papers No. 51, January 2012, http://www.uni- kassel.de/einrichtungen/fi leadmin/datas/einrichtungen/icdd/Publications/ICDD_Working_Paper_ No.5_Burchardt___Weinmann.pdf , p. 3. 18 J. C. Calleros: The Unfi nished Transition to Democracy in Latin America, Routledge 2009. 84 R. Benedikter et al. era remain in place (i.e. the “binominal” voting system, the social security system, elements of the educational system, the basic pillars of the tax system). Given that these features continue to tend to favour the wealthy, well-connected, and infl uential, many domestic observers believe they are the real cause of perpetuated inequality. In response, in the early stages of the presidential and general elections of November–December 2013, some of the leaders of the—partly radical—leftist student protest movement, which since 2011 has left its mark on Chile’s social psychology and public opinion through uninterrupted social protests and intellectual propaganda for a more “just”, pluralistic, and politically diversifi ed country, forged alliances with the presidential candidate Michelle Bachelet (62) of the Socialist Party ( Partido Socialista , or PS) in order to concentrate the reforms on one common topic: inequality as rooted in the political system of Chile. Bachelet ran for president for the second time, having already served one term in offi ce from 2006 to 2010. Among the candidates who sustained her was the most popular female (former) student leader, Camila Vallejo (25), known beyond the country’s borders for her intellectual acumen, who decided to side with the Communist Party ( Partido Comunista de Chile, PCCH) to gain a mandate—a move criticized by many, since communism isn’t very democratic in itself or equal in its hierarchical organization, and in retrospect hasn’t produced much good for Latin America. With the help of the alliance between the socialist political establishment and the inexperienced, but fresh-minded leftist newcomers of the student protest movement, Bachelet won the fi rst round of the presidential election on November 17, 2013 by a comparatively large margin, beating her childhood friend Evelyn Matthei of the governing Center-Right coalition Alliance for Chile (Alianza por Chile ) and the conservative party Independent Democratic Union ( Unión Demócrata Independiente , UDI), by almost double the amount of votes (47 % against 25%). In addition, Bachelet’s leftist coalition New Majority for Chile (Nueva Mayoría para Chile ) won 12 of the 20 seats in the Senate and 67 of the 120 seats in the Chamber of Deputies.19 Bachelet’s subsequent win in the second, runoff round against Evelyn Matthei on December 15, 2013, was predictable then: she won with over 62 % of the vote, although the turnout was signifi cantly lower than in the fi rst round. But there were achievements in Matthei’s defeat too, and fl aws in Bachelet’s win. As Bachelet herself put it while casting her vote on the fi rst round in Santiago, We have said that we would like to win in the fi rst round because there is a lot that needs to be done. We know that this time, for the fi rst time there are nine presidential candidates […] but obviously we would like to win [in the fi rst round with absolute majority].20 But although Bachelet was the overwhelming favourite, she didn’t win in the fi rst round. The question is why. Was it due to lack of voter confi dence in a former president that had left offi ce in 2010 with mixed judgements, criticized not least by the student movement for failing to signifi cantly mitigate social inequality, to reform the educational system, and to pluralize Chilean society?

19 M. Jarround: Bachelet’s Promised Reforms Could Face Uphill Struggle. In: Global Issues, December 16, 2013, http://www.globalissues.org/news/2013/12/16/17969 . 20 Reuters: Chile’s Presidential Election Under Way. In: Voice of America, November 17, 2013, http://www.voanews.com/content/chile-presidential-election-under-way/1791741.html . 4 The Political Dimension: Chile After the Presidential… 85

Almost as important, in the 2013 elections Bachelet also failed to gain a majority in the parliament large enough to change the constitution, for which she would have needed three fi fth of the seats. It will thus be diffi cult for her to change the constitution and fi nally put Pinochet’s heritage to rest, as she had promised in the electoral campaign, by the end of her term in 2018. In comparison with her fi rst term as president (2006–2010), she will probably face a more problematic second term in her new tenure 2014–2018 since she lacks the numerical backing in parliament to fully meet the expectations of those who voted her. Many voters seemed, indeed, to anticipate this outcome already before the elections—thus choosing not to participate. Overlooking the political constellation, the question is: Was the impact of the student protest movement that stirred up the political landscape of Chile since 2011, when the mass protests against social inequality, rising study fees, and the Pinochet constitution started, not as infl uential as expected? As voter turnout in November and December 2013 remained below 50%, it might be that the chance of a political springtime in Chile involving consistent parts of the population has failed only shortly after it rose to the fore. But if so, why? And against which background?

The 2013 Elections: A Result Representative of a Changing Social Landscape?

Although some observers branded Bachelet as “the hermetic candidate”,21 who in eight months of campaigning was always the favourite in all polls, and thus obviated every confrontation with the other eight candidates,22 this lack of communication and public combativeness might have not been the primary cause of her “conﬁ ned victory”. Other reasons seem to have been more important, and they are likely to persist over the entire duration of her term. Thus, we have to understand them to understand the current constellation and the main political trajectories of the years ahead. On the one hand, the fact that Bachelet gained a clear victory against Matthei, the pupil of conservative president Sebastián Piñera, and that the coalition around Bachelet won more than 50 % of parliamentary seats were signals that a good part of Chileans, obviously feeling discontent, wanted—and probably continue to want—change. On the other hand, the 2013 elections were decided less by ideology or “big picture” questions than by concrete, down-to-earth political demands; and rather by future than past issues, in their majority not involving issues about Pinochet’s

21 R. Montes, W. Díaz: La candidata hermética. La ganadora de las elecciones chilenas, Michelle Bachelet, solo confía en un estrecho círculo de colaboradores. In: El País, 16 Dicembre 2013, http://internacional.elpais.com/internacional/2013/11/16/actualidad/1384642373_247613.html . 22 Ibid. 86 R. Benedikter et al. legacy or “unfi nished democracy”, but primarily practical problems. These problems, generally overlooked by the international public, are likely to remain over Bachelet’s second term. Thus, their comprehension is crucial to identify the present and upcoming transition of the country. What are the problems most felt by the public? There are three main problem clusters that stand at the center of social unease. First, in Chile citizens’ fundamental needs are in many cases not understood as public tasks or individual rights, but as private services. Education, healthcare, and pensions are parts of the business sphere. They are dominated by the association of big “economic groups” (grupos económicos ), an informal network of the richest Chilean families. Politics in the past 20 years has secured the profi tability of basic needs in order to safeguard returns to the entrepreneurial families located in the highest stratum of society, and in doing so, a neoliberal mindset was pursued. Education in particular has become a cash cow for Chile’s elite. Since 2001, protesters have rallied against ever-rising fees in the widely privatized schooling system and, later, in favour of a constitutional change to make education and other services free for all.23 Since banks and universities are also widely co-controlled by the “big” Chilean families, most students hold them accountable for their high levels of exaggerated student loan debt.24 Second , in Chile key resources like water, copper, forests, and agriculture are widely controlled by the same network of elites that control the service industry: the network of super-rich families which are closely intertwined and “naturally” tend to oppose social innovation. In fact, the still existing dominance of a few economic groups over the national economy doesn’t foster innovation and is the outcome of decades of neoliberal economic policy. The dominance of a few families over the resource sector is felt as a social problem because natural resources compose the economic basis of Chile. A good part of these resources are currently exported to China, with a trend toward further increase and economic exchange given rising demand by the Pacifi c giant. As Juan Carlos Gachúz reports, China’s foreign policy has been characterized in the last decade by a heightened interest in reaching out to Latin America, particularly to countries rich in natural resources and with potential markets for Chinese exports. Chile is one of these countries. Currently, China’s relationship with Chile is one of the former’s most solid in all of Latin America. Chile was the fi rst Latin American country to sign a free trade agreement with China (the other countries being Peru and Costa Rica). The Chile–China relationship started under the socialist government of Salvador Allende; in 1970, Chile was the fi rst South American nation to establish diplomatic relations with China. Even though the Chilean economy has benefi ted from the signing of the free trade agreement, it also faces potential risks. To continue to benefi t, Chile needs to boost exports in other potential export sectors

23 J. G. Castañeda : Disgruntled Democracies. In: Project Syndicate, September 26, 2013, http:// www.project-syndicate.org/commentary/latin-america-s-protest-problem-by-jorge-g DOUBLEHYPHENcasta-eda. 24 J. Durrett: Students change political debate leading up to Chilean elections, loc cit. 4 The Political Dimension: Chile After the Presidential… 87

( value-added products or services) and should attempt to attract more Chinese direct investment to Chile’s export industry. The export of raw materials (particularly nonrenew- able ones) is not always sustainable in the long term. The roles of the Chilean state and the private sector in attracting Chinese investment and enhancing diversifi cation of exports of value-added products are crucial for the future of the economy of Chile and its relationship with China.25 But not only China is keen to get a grip on Chile’s resources. Also among the contestants is Germany, the economic lead nation of Europe and global export champion. Germany doesn’t have any domestic resources of its own and thus is particularly dependent on high-level know-how technology production which as a prerequisite requires the import of specifi c resources, including rare earths: Berlin is applying pressure to obtain more exclusive ‘resource partnerships’ to ensure the supply of natural resources for German industry. According to the Ministry of the Economy and Technology, the German government has its eye on Chile […] as new ‘resource partner’ […] Berlin’s plans for a supplementary accord with Chile, which holds the world’s greatest copper deposits, are furthest advanced. German enterprises are also receiving a large portion of their supplies from Chile … This frantic search has been caused by the heightened global market competition and therefore the dramatic rise in prices of raw materials over the past few years. The focus is not only on energy resources, such as oil and gas, but also on mineral resources, which are indispensible to the industry, such as iron ore or copper. The German economy had progressively retreated from the mining of raw materials, because raw materials generally remained at a relatively low price for decades, and the necessary resources could be bought rather inexpensively on the world market […] For some time, Berlin has been seeking to expand its own infl uence on the natural resources sector through a concerted action involving politics and economy. The ‘partnerships’ […] are particularly aimed at exclusive access to their ‘rare earth’ deposits. Germany, in exchange, promises an allegedly just-as-exclusive transfer of scientifi c expertise.26 It thus seems that Chile will be a much sought-after partner in the new race for Latin American resources, a competition between the ongoing interests of the US and the increasing interests of Asia (China) and Europe (Germany). In this game, the mining sector will play a decisive role: At the moment, Berlin primarily has its eye on Chile for the expansion of its ‘resource partnerships.’ Mining companies plan to invest around US $50 billion in the local mining sector. German industry is also very interested. Europe’s largest copper producer, Hamburg’s Aurubis AG […] is already drawing one quarter of its copper concentrates from Chile. In early January 2012, German Minister of Development Dirk Niebel (FDP) visited Santiago de Chile along with (German) Parliamentary States Secretary Gudrun Kopp

25 J. C. Gachúz: Chile’s Economic and Political Relationship with China. In: Journal of Current Chinese Affairs, 41 (2012), 1, pp. 133–154. 26 German-Foreign-Policy.com. Information on German Foreign Policy: In Search of Resource Partners, May 29, 2012, http://www.german-foreign-policy.com/en/fulltext/58307/print?PHPSES SID=1t6ka5u2eo2cv7eqirb4h8qb40. Cf. the already very evolved cooperation in political, economical and cultural relations, science and technology: Federal Foreign Ofﬁ ce of Germany: Chile, April 2014, http://www.auswaertiges-amt.de/EN/Aussenpolitik/Laender/Laenderinfos/01-Nodes/ Chile_node.html . 88 R. Benedikter et al.

(FDP) to confer with members of the Chilean government about an intensive cooperation in terms of resources. Kopp explicitly emphasized the signifi cance of Chile, ‘one of the richest countries in the world in raw materials’, a signifi cance due to current ‘bottlenecks’ ‘in the supply of German industry.’ The planned ‘resource partnership’ with Chile is based on the principles of […] already concluded alliances […]: German know-how in exchange for Chilean raw materials. Niebel pointed out that ‘over the next few years’ Chile ‘will lack 20,000 qualifi ed specialists in the mining sector.’ Germany is ‘prepared’ to engage its technical expertise ‘in the reform process in Chile with the active support of the German economy.’ 27 In turn, as Michelle Bachelet pointed out shortly after her offi cial visit to Germany on 26–28 October 2014, Chile wants To undertake increased efforts towards the improvement of human capital, and thus […] I am interested without doubt particularly in the German formación de capital avanzado , i.e. the dual system of vocational education, science, technology and innovation. But also […] key industries play an important role. We are interested primarily in mining and non- conventional, renewable energies where Germany is leading.28 But there is popular resistance to such—at fi rst glance mutually only advantageous— foreign policy agreements in Chile: … Resistance to this policy has been growing at all levels of the [Chilean] society over the past few years, and [it] is met with […] government repression. Labor struggles are […] recurring in the mining industry, most recently in opposition to the plan to privatize the large state-owned Codelco copper company. The workers went on strike and engaged in other forms of protests. They also demanded that the government use a larger portion of the state copper mining profi ts for the benefi t of the population. However, the […] government […] continues to pursue its privatization plans and intends to give foreign companies free access to the country's Lithium resources.29 Despite the unmistakable warning signals, primary resources continue to form the mainstay of Chile’s national productivity up to the present day. Since Chile’s foreign relations depend on the sector, wages and social security are kept low in favour of foreign investors, resource partners, and owners. The subsequent social protests “from below” are almost always immediately suppressed—thus, in the last few years, triggering a spiral of even broader protests. The interrelation between popular unease and resource orientation has reached a point where many independent observers talk of an “unhealthy extractivism” destined to deepen social rifts, thus functioning as an expression of the so-called “resource curse”30 that all too

27 German-Foreign-Policy.com. Information on German Foreign Policy: In Search of Resource Partners, loc cit. 28 Michelle Bachelet, quoted according to: Interview with Jenny Pérez for Deutsche Welle: Entrevista de DW con la presidenta de Chile, Michelle Bachelet. Hacia un nuevo Chile: ¿Qué costo tendrán las reformas?, November 2, 2014, http://www.dw.de/entrevista-de-dw-con-la-presidenta- de-chile-michelle-bachelet/av-18034853 . Translation from Spanish by the authors. 29 German-Foreign-Policy.com. Information on German Foreign Policy: In Search of Resource Partners, loc cit. 30 Heinrich Böll Foundation Berlin: Resource extraction and the future of democracy in Latin America. International conference, May 13–14, 2014, Berlin, http://www.boell.de/de/2014/05/06/ rohstoffausbeutung-und-die-zukunft-der-demokratie-lateinamerika . 4 The Political Dimension: Chile After the Presidential… 89 often characterizes resource-rich countries in the current framework of globalization: Those rich in resources concentrate on extracting them under the cheapest conditions, often to the disadvantage of their populations, and thus—unwillingly—fall behind countries who, lacking these resources, concentrate on technological advancement, know-how, high skills, and social innovation. Third, although social services, education, and the social consequences of export- oriented resource extraction were strong rallying cries, social unrest is due to a deeper, general mistrust of Chile’s politicians, who, many believe, are still tied to the intransparent political habits that brought Chile to its current need of reform. Many Chileans generally mistrust traditional politics, and most of the politicians in charge prior to the elections of 2013, in their view, were still wedded to the structures of the former dictatorship of Pinochet. The increased dissatisfaction with political competition resulted in voter behaviour that favoured the entrance of former student leaders into the political institutions.

The 2013 Elections: Knock-out Races Within the Parties, Mirroring Public Discontent

One of those who profi ted from this threefold popular unease in the framework of the 2013 elections was Camila Antonia Amaranta Vallejo Dowling, one of the main student leaders of the protest wave in 2011. Of partly radically leftist inclinations, Vallejo was a member of the central committee of the Communist youth organization Las Juventudes Comunistas de Chile. Early on, however, she became a national identifi cation fi gure beyond party boundaries through her role in the student movement. Although in the elections of 2013 she was a candidate of the Communist Party that won only 6 out of 120 seats in the Chamber of Deputies, she was elected with more than 43 % of the votes in her electoral district, one of the highest victory margins of that election. During the counting of the votes, she declared in the left- oriented online-newspaper El Mostrador that the goal of the next presidency would need to be not only the displacement of the center-right government under Sebastián Piñera, but also the avoidance of a new government of the former center-left coalition Concertación de Partidos por la Democracia .31 Vallejo’s intended change of the political system aimed beyond party logics and acknowledged the (unavoidable) historical attachment of the political classes with the institutional heritage of the former dictatorial regime—a view shared by the majority of Chileans widely independent of their political leanings. The selection of

31 UPI: Vallejo: “El objetivo no es sólo desplazar a la derecha, sino que también no exista un nuevo gobierno de la Concertación”. Dice que no se pueden repetir las mismas prácticas y mantener ciertas cosas del modelo. In: El Mostrador País, 17 de noviembre de 2013, http://www.elmostrador. cl/pais/2013/11/17/vallejo-el-objetivo-no-es-solo-desplazar-a-derecha-sino-que-tambien- desterrar-las-logicas-de-la-concertacion/ . 90 R. Benedikter et al. the 2013 presidential candidates through inner-party processes mirrored the widespread unease of larger parts of the population with both sides of the political establishment: both the left and the right. As a result, the merciless knock-out between candidates within the center-right and center-left coalitions began weeks before the elections, not least as a reaction to popular criticism of the established parties and their coalitions inspired by the arguments of the student protest movement. For example, Evelyn Matthei seems to have been “only” the third option for presidential candidate of the center-right coalition Alianza por Chile . She therefore lacked optimal conditions for preparing her political discourse and campaigning, which might partly explain her early and clear defeat. The fi rst candidate of the center-right coalition was Laurence Golborne who, like Matthei, was a member of the conservative-right party Unión Demócrata Independiente (Independent Democratic Union, or UDI). Golborne served as minister of mining (i.e. resource extraction) under acting president Sebastián Piñera, who was former CEO of the energy company Enersis , and close collaborator of Horst Paulmann, head of South America’s biggest multinational enterprise, CENCOSUD, a publicly traded retail company. The men cooperated on the expansion of CENCOSUD. As mentioned, after some days in the campaign, Golborne was taken off the presidential race by the party leadership, allegedly because personal deposits of his were found in fi scal offshore paradises. However, unoffi cially it was said that this unconventional step was triggered by his unsatisfying results in polls and public support. After Golborne, Pablo Longueira assumed his political lead role as presidential forerunner of the center-right. Longueira is considered by many as the ideological successor to Jaime Guzmán (1946–1991), a professor of constitutional law who was a close collaborator of dictator Pinochet over many years, and later one of the founding fathers of the UDI. Longueira assumed the epic task of candidature in the inner-party pre-elections and triumphed in spite of very little time for campaigning. However, some days later he resigned, allegedly because of a “depressive crisis”—unusual for a brilliant surprise-winner with great polls. As a result, the center-right coalition remained without a candidate again. This was the moment when Evelyn Matthei started her presidential campaign. The overall process showed an unusual amount of symptoms of insecurity and volatility within the governing center-right coalition, probably caused less by the arguments of the leftist party coalition than by the incessant public pressure of the student protest movement.

The Result of the 2013 Elections: A Success for the Student Protest Movement—But Also for Chile’s Students and Population at Large?

The 2013 parliamentary elections resulted without doubt in the biggest political success for the Chilean student movement for the last 20 years, consecrating it as a political and institutional factor of infl uence for the years to come. The former student leaders Camila Vallejo (43.68 %), Giorgio Jackson (48.14 %), Karol Cariola (38.50 %), 4 The Political Dimension: Chile After the Presidential… 91 and Gabriel Boric (26.17 %) triumphed in their competitions for parliament seats with clear victories. Most of them are supportive of Bachelet’s current second government. Among these, the victory of Camila Vallejo stood out because of her notoriety— a paradox if not a contradiction for a Communist Party representant, a party in its nature dedicated to equality and group solidarity rather than individuality and VIP- status of its members. Nevertheless, in recent years the former geography student received massive international media attention. The British newspaper The Guardian explained as early as in 2011: Not since the days of the Zapatistas’ Subcomandante Marcos has Latin America been so charmed by a rebel leader. 32 In 2012, The Economist confi rmed the expectation of a “bright political future” for Ms. Vallejo—not mentioning though that through her glamorous personal rise the student movement in many ways became restricted to one face, although as far as Communism goes, this face was (and is) by no means representative of the overall student movement since the majority of Chile’s students are not Communists. Nevertheless, it seems like the major international mainstream media were right in their prediction of Camila’s future. After her victory in 2013, “the world’s most glamorous revolutionary”33 (The New York Times) remains an infl uential fi gure of international visibility. Camila’s fi rst daughter with partner, Cuba-rooted Julio Sarmiento, another key fi gure of the student movement of 2011 and, like Camila, ex-president of the student organization Federación de Estudiantes de la Universidad de Chile (FECH), was born on October 6, 2013, only a few weeks before the elections. The question remains: will the undeniable personal success of a single student protest leader also result in the success of Chile’s students and the broader population in general?

The Effect of the Student Movement on the 2013 Elections: Growing Pluralism, But Insufﬁ cient Participation

In retrospect, the student protest movement of 2001–2013 inﬂ uentially shifted Chile’s traditional left-right dichotomy and thus the national political dialogue by exerting pressure on both sides of the political spectrum. Voters who previously remained rather passive now stood for free education, a new constitution, and a

32 J. Franklin: Chile’s Commander Camila, the student who can shut down a city. In: The Guardian, 24 August 2011, http://www.theguardian.com/world/2011/aug/24/chile-student-leader-camila- vallejo . 33 F. Goldman: Camila Vallejo, the World’s Most Glamorous Revolutionary. In: The New York Times, April 5, 2012, http://www.nytimes.com/2012/04/08/magazine/camila-vallejo-the-worlds- most-glamorous-revolutionary.html?_r=0 . 92 R. Benedikter et al. change in the pension funds system—all topics raised by the student protest movement, now shared by most parties. Most of the candidates of 2013 at least paid lip service to the broadly articulated desire for structural change in the context of growing social inequalities, as raised by the protest movement on the street. As an effect of student protest and the respective effect of political encourage- ment and a growing social psychology of individual empowerment, there were more presidential candidates to choose from—nine—in the 2013 presidential elections than in former occasions. Nevertheless, once again the race eventually came down to two party stalwarts: Evelyn Matthei for the right, the economist who served as Minister of Labor and Social Security under Sebastián Piñera’s center-right government, and Michelle Bachelet, a former president 2006–2010, for the left. While Bachelet stood for change (although somewhat ambiguously; her previous time in offi ce didn’t change the country all that much), Matthei, a newcomer to the presidential race, was actively representing neoliberal continuity. But the fact that the elections ended up as a classical fi ght between “left” and “right” does not mean that Bachelet and Matthei were the preferred choice of the majority of Chileans. Rather, even if some believed in the independent candidates’ visions (often close to the student’s arguments), most voters preferred to play it safe by voting for the lesser evil of the two main candidates—a refl ection of the voting system, as we will see. According to offi cial information provided by the Chilean government, in November 2013 a total of 6,691,840 voted. However, it is unclear how many people the Chilean voter registry actually contains since the 2011 reform from voluntary inscription and obligatory vote to automatic inscription and voluntary vote changed the parameters.34 Cases were reported where deceased people were included in the registry. If the entire known voter registry is considered, including potentially deceased people, there was a 49 % voter turnout; but according to the government it was offi cially 56 %. In any case, the turnout was in the low range, as predicted by most institutions that carried out pre-electoral polls. It is probable that a larger than usual amount of young people chose not to vote—which could be read as a defeat for the student protest movement and the liberal-progressive factions on all sides in general. Another detail embodying general mistrust in politics was the civil society movement “Mark your vote with AC”, which emerged some days before the elections. “AC” stands for Asamblea Constituyente (constitutional assembly). This non- partisan group received 8.2 % of the vote, enabling, through an extensive media campaign of unclear fi nancial origins, Chileans to express their desire for constitutional change with “AC” on their voting paper, a move illegal by offi cial laws.

34 S. Bodzin: Chile’s voter registration reform gives major boost to democracy. In: Latin America Monitor, December 22, 2011, http://www.csmonitor.com/World/Americas/Latin-America- Monitor/2011/1222/Chile-s-voter-registration-reform-gives-major-boost-to-democracy . 4 The Political Dimension: Chile After the Presidential… 93

A Voting System Dedicated to Secure the Status Quo : The “Binomial” System, Unique of Chile

The principal mistrust of a large part of the population of the nation’s political protagonists, institutions, and mechanisms in 2013 was nothing new in Chilean democracy. It is a recurring motive throughout Chile’s young democratic history and has many causes. Among them is the over-complex and poorly transparent electoral system that dictator Augusto Pinochet inserted into the constitution of 1980, which to this day remains valid. To ensure that democracy would never become too liberal, impeding serious changes in terms of political, economic, and institutional reforms and eventually to secure the continuity of many members of the elite, Pinochet implemented the “binomial” electoral system, a method invented in late- Communist Poland in the 1980s, adapted to Chile, and today applied only in this Andean nation. The “binomial” system mandates that the two parliamentary seats foreseen for each of the electoral districts (each district has two senators, or senadores and two representants, or diputados ) must be fi lled by coalitions of parties that can present two candidates per seat. A coalition can win both seats (of senadores or diputados ) only if it wins double the votes of the next ranked coalition. If it doesn’t, the seats are split between the two top-ranked coalitions, one for each of the two. As Carlos Huneuus explains the mechanism: In Chile’s bicameral constitutional arrangements, the Chamber of Deputies, the lower house, consists of 120 members elected for a four-year term, two for each of the 60 electoral districts. The Senate has 38 elected members, two for each of the 19 districts, elected for an eight-year term: there are elections for half of the seats every four years, simultaneously with elections to the Chamber of Deputies. There are in addition nine non-elected members, the ‘institutional’ or ‘designated’ senators, named by the National Security Council (four), the Supreme Court (three) and the president (two), and one ex-offi cio life member, former President Eduardo Frei Ruiz-Tagle. These arrangements were negotiated by Pinochet and his supporters as they fell from power during the transition to democracy. Parties, coalitions, or independents present lists, normally containing a maximum of two candidates per district, in elections both for the Chamber of Deputies and for the Senate. Voters vote for the candidate of their choice. The fi rst seat goes to whichever list receives the most votes in total: the representative elected is the individual candidate on that list who receives the highest vote. To take both seats, the most successful list must receive twice the number of votes of the second list. This system forces the parties to form electoral coalitions because the effective threshold is very high: 33.4% of the total vote for the top list is required to win one seat. However, a list needs to receive 66.7% of the total vote to be guaranteed both seats. There are two major electoral coalitions, which in 2001 won all the seats in the Chamber of Deputies except one. The center-left Concertación por la Democracia formed by four parties opposed to the Pinochet regime (the Socialists, the Democracy Party, the Christian Democrats, and the Radicals). The right-wing Alliance for Chile (consisting of the Independent Democrat Union, UDI, and National Renewal, RN) supported the Pinochet regime … The result of this ‘binomial’ electoral system is that almost all districts return one representative from the Concertación and one from the Alliance . The system could create competition between the two candidates on a list for the one seat it will win, but in practice even this is severely limited by elite accommodation within both coalitions. This electoral system is unique because in practice it favours the largest minority, not the majority. It is thus not a 94 R. Benedikter et al.

majoritarian system. It is a system which uses a proportional mechanism, but the results it produces are not proportional, since it allows an electoral list to take half the seats with only 34 % of the votes. 35 Independent Chilean political analyst Joaquín Vasquez Amarales comments on the consequence of this electoral mechanism, which results in the exclusion of candidates not belonging to the main leftist or rightist coalitions: There are two different sets of mechanisms that structure the way democracy is normally enacted through elections, and how the will of the people is translated into concrete decisions. There are institutional mechanisms, relating to the laws governing the process of election; and there are extra-institutional mechanisms, relating to the unwritten laws, the socio-economic structure, and the correlation of informal powers to formal procedures in a given society. In Chile, we can see how both of these sets—institutional and extra-institutional—tend to cooperate against a truly representative democracy. In the institutional framework, we have the ‘binomial electoral system’, which was included in the constitution of 1980 by Augusto Pinochet. It was intended as a preventive measure against the establishment of a too liberal democracy, where too many things could happen, or things could change too fast. In this system, the competition is between coalitions, not between individual candidates. A coalition can win both seats only if its total amount of votes is double that of the second-ranked competing coalition. If it doesn’t achieve this amount, the second seat goes to the second-ranked coalition even if its vote total is inferior. For an independent candidate to win a seat, she or he must compete against the big coalitions of the left and of the right: thus, an individual, independent candidate must defeat the sum of both of a coalition’s candidates, as Article 109 (bis) of Law 18.700 prescribes. And this is virtually impossible.36 In such a system, for an independent candidate to win a seat de facto means that she or he must get more votes than both of the mainstream leftist and rightist party coalitions—which is extremely improbable. What is more important: Voters know about this system and its expected outcome. Thus, in order not to waste, their ballot they tend to vote for those candidates who have a concrete chance, i.e. one of the representants of the traditional big coalitions. Many voters think this is the “lesser evil”, since although they may cultivate sympathies for independent or small party candidates, they know these candidates do not have a realistic chance of getting a seat. The effect of the “binomial” electoral system established by Pinochet thus is a widespread “I vote for the lesser evil” mentality among Chilean voters who, despite all inclinations towards innovation, are indirectly forced to neglect independent candidates and thus to stabilize the traditional system by always voting for the established political forces in the end, from purely practical considerations. The results of the 17 November 2013 parliamentary elections are an example of such practice. Almost all seats went to the two big coalitions in a roughly 50–50 balance. In almost every district, there is one diputado or one senator from the

35 C. Huneeus: Chile: A System Frozen by Elite Interests. In: International Idea: Supporting Democracy Worldwide, http://www.idea.int/elections/upload/chile_esd.pdf . 36 J. Vasquez Amarales, quoted according to: Interview with the authors, Santiago de Chile, December 22, 2013. 4 The Political Dimension: Chile After the Presidential… 95 center-left New Majority and one of each from the center-right Alianza , with some rare exceptions. The probably most surprising victory of an independent parliamentary candidate went to student leader Gabriel Boric Font (26.17 % in district 60: Río Verde , Antártica , Laguna Blanca , Natales , Cabo de Hornos , Porvenir , Primavera , Punta Arenas , San Gregorio , Timaukel and Torres del Paine ). Nevertheless, the global picture in votes is approximately 55 % for the left (plus independent candidates) and 45 % for the right. On the presidential level, the independent candidates who were not linked to one of the big coalitions together achieved 28.3 % in the results in the ﬁ rst round. Marco Enríquez Ominami (11.0 %) and Franco Parisi (10.01 %) did best among the seven independent presidential candidates. In contrast, Marcel Claude who claimed to be supported by the student movement didn’t reach even 3 % points (2.8%). All in all the binomial system, which is unique in the democratic world, interpreted in a positive way, was intended to ensure stability during the transition from dictatorship to democracy, and to put an emphasis on collaboration between the two main party coalitions of left and right. This may have been a smart decision for Chile’s transition in the ﬁ rst post-dictatorial years, but today it constitutes a hurdle for the development of “full democracy”. In 2013, it left Chileans feeling that they had no real choice: independent candidacies are almost nonstarters, and when the time comes to govern, there seems to be little difference between the two mainstream parties because of the “close cooperation” tie anchored in the binomial system and the informal bipartisan ties between many members of parliament. In the past, this led to similar approaches in economic policies and to the adherence of both the left and the right to the neoliberal free market ideology.

An Additional Factor: Poorly Regulated Lobbying

Electoral politics in Chile are, furthermore, often tainted by lobbying, which remains widely unregulated. The most recent cases were the scandals of 2015 in which allegedly the government was involved and which caused huge public outcry. A notable attempt to increase transparency was in 2003, with a law project that wasn’t successful in congress. As a result, the public still has no real way of knowing who spends money on lobbying or who receives it. Most of those Chileans who know about the mechanisms in play (and they are a minority) assume that the lack of regulation serves the dominating corporations and the richest families who keep indirect control of the overall party system by fi nancing lobbying of all sides and, thereby, discourage signifi cant ideological swings towards left or right, keeping a left-right balance that sta- bilizes the system.37 While there may be some wisdom in such an arrangement, it isn’t fully democratic in the strict sense since it indirectly infl uences election outcomes.

37 R. Garín: Cómo y por qué el lobby no está regulado en Chile. In: Centro de Investigación e Información Periodística de Chile CIPER, 10.01.2013, http://ciperchile.cl/2013/01/10/ como-y-por-que-el-lobby-no-esta-regulado-en-chile/ . 96 R. Benedikter et al.

As Moni Acevedo, a university teacher linked to the student movement, puts it: The popularity of the Piñera government 2010–2014 went up and down like a roller-coaster during his years in offi ce, mainly because of the vigorous use of media by different interest and lobbying groups both from the right and the left. Since we fi nd political illiteracy in parts of Chilean society and in general a widespread sense of powerlessness, citizens usually fi rst want to believe politicians’ discourse, but after some disillusions they want to take these politicians out of government. Third, they like to trust them again because they are infl uenced by populist lobbying actions like emergency vouchers or promises of new working places broadly advertised in the media. Bread and circus for the people—this strategy of the Chilean mainstream media and their lobbying partners doesn’t tire out. 38 Particularly problematic is the fact that many of the anonymous donors who fi nance the parties are presumed to be the owners of big media corporations. These media companies tend to infl uence public perceptions of politicians by promoting the discourse of those they like on given issues, and thus playing the role of lobby- ists themselves, and in their own interest. It is not that there is no criticism of these practices in the Chilean public sphere. Rather, the problem is that there is little chance of escaping mediatic propaganda, because the impact of today’s media infl u- ence in Chile is even more accentuated than in previous years, as political analyst Vasquez Amarales explains: The ‘big’ Chilean families are not only the co-owners or stakeholders of most big companies in mining, agriculture, fi shing, etc.: they’re the owners of the mainstream media companies too. There was a case earlier in 2013: A diputada (house representative) received campaign donations from a big fi shing industry owner. In 2013, the fi shing law—fi shing is one of the most profi table businesses in Chile—was modifi ed, and it gave several advantages and concessions to big industry owners; among them, to those who donated to the diputada . How infl uential this donation was on the legislative process and if it was legal was discussed. But it in the end, authorities and the parliament left the issue unsolved. 39

Donations by “Inﬂ uential Actors”

On 18 November 2013, just 1 day after the elections, its timing questioned by some international observers, the Santiago-based investigative Journalism Institute CIPER (Centro de Investigación e Información Periodística ) published the second report of its multi-annual research project on the “secrets of electoral ﬁ nancing in Chile by private institutions”.40 This publication was of particular relevance in

38 M. Acevedo, quoted according to: Interview with the authors, Santiago de Chile, 5 January 2014. 39 J. Vasquez Amarales, quoted according to: Interview with the authors, Santiago de Chile, December 22, 2013. Cf. Equipo CIPER: Ley de Pesca: juicio por cohecho amenaza con quitar anonimato de aportes privados de campaña. In: Centro de Investigación e Información Periodística de Chile CIPER, 16.05.2013, http://ciperchile.cl/2013/05/16/ley-de-pesca-juicio-por-cohecho- amenaza-con-quitar-anonimato-de-aportes-privados-de-campana/ . 40 F. Miranda y F. Koknic: Los secretos de las empresas que fi nancian la política (II): Mineras, banca, pesqueras, y más. In: Centro de Investigación e Información Periodística de Chile CIPER, 18.11.2013, http://ciperchile.cl/2013/11/18/los-secretos-de-las-empresas-que-fi nancian-la-politica- ii-mineras-banca-pesqueras-y-mas/ . 4 The Political Dimension: Chile After the Presidential… 97 understanding the post-election phase because both Bachelet and Matthei were in need of fresh funds to fi nance their further political actions and public discourse. There are without doubt certain legal restrictions of direct private donations to parties in Chile. Claudio Agostini explains: Donations to political parties of up to US$1,300 can be totally anonymous in Chile, with no limit of the number of individual donations allowed, and only a limit to the maximum spending allowed within one campaign. The overall unregulated amount is so high—for a presidential election it’s $5.000 million Chilean Pesos (CLP) or US$10 million, for an economy with a GDP of US$263.000 million41 —, that in the history of the law that governs political donations instituted in 2003 only once it has been reached: in the 2009 Presidential election, by the latter president Sebastián Piñera, who spent 100% of the legally allowed spending. The second ranked candidate, Eduardo Frei, spent 77%, and the third ranked, Marco Enríquez-Ominami, 34%.42 There are three methods by which a private person can fi nance a political party in Chile43 : 1 . Anonymous donation : Donations of up to US$1,300 can be anonymous to the public . The identity of the donor is known to the receiving party, which must register the donation in its books. A Chilean party can have up to 20 % of the maximum allowed campaign spending in such anonymous donations. 2 . Reserved donation : This donation is made to the National Electoral Service instead of the party. The Service then gives it to the party, with total anonymity of the donor. This is made to prevent the parties having knowledge of who fi nances their campaign, in order to prevent “infl uence traffi cking”, as it is expressed by the regulations. 3 . Public donation : The identity of the donor is known to the public and to the party. This method is optional for donations below US$1,300, obligatory for donations between US$1,300 and the allowed maximum (which depends on the type of candidacy and election, and ranges from US$28,000 to US$120,00044 ), and obligatory for donations beyond the maximum. In the 2009 presidential campaign for instance, center-left candidate Eduardo Frei received US$700,000 in anonymous donations; center-right candidate Sebastián Piñera received US$3,500,000 in reserved donations, but no anonymous donations. 45 During its investigations, CIPER discovered several cases where even these generous legal restrictions were not respected by the fi nanciers, particularly in the 2013

41 C. A. Agostini: Financiamiento de la Política en Chile: Campañas Electorales 2009–2010, Centro de Estudios Públicos CEP 2011, pp. 2ff., http://www.cepchile.cl/dms/archivo_5011_3155/ DOC_CAgostini_Financiamiento-de-la-Politica-en-Chile.pdf . 42 C. A. Agostini, loc cit., pp. 22ff. 43 All contained in: Ley 19884: Sobre Transparencia, Limite y Control del Gasto Electoral. In: Bilbioteca del Congreso Nacional de Chile, 19 June 2013, http://www.leychile.cl/N?i= 213283&f=2013–06-19&p . 44 C. A. Agostini, loc cit., pp. 10–12. 45 C. A. Agostini, loc cit., pp. 18–19. 98 R. Benedikter et al. presidential and parliamentary elections campaign.46 Dubious, though not necessarily illegal, practices were found in many sectors intertwined with the international trade and export business, for example in mining: Enersis, in banking: Banco Santander, in ﬁ shing: Corpesca, most of which are co-controlled by the “big” Chilean family empires.

An Inscription System with Side Effects

Another problem of the elections of 2013 barely known to the international public was the new inscription system that was introduced by the Chilean parliament in 2011. Whereas in the old system Chileans were required by law to vote when previously inscribed, following the reforms since 2011 they are now automatically inscribed and can decide for themselves if they want to vote or not. The new system was rolled out in October 2012, just in time for the then municipal elections. According to Jorge Atría, a Chilean sociologist at the Free University of Berlin and member of the Institute of Latin American Studies there, the new rule increased the number of voters who did not go to the polls, as he told the authors two weeks after the elections: As the November 17th, 2013 elections were the fi rst general elections with the new system, the predictions were complex due to the unknown effects of the new ‘voluntary’ nature of voting. Many Santiago-based analysts were debating whether the new voting system would increase or decrease the number of voters. Contrary to the optimistic visions of an increase of voters by some experts, reality has shown the opposite trend. Even though the participation of voters was higher than in the municipal elections of 2012, when the new voting system was fi rst introduced, the presidential elections of 2013 represented a historical low in citizen’s political participation. In response, voices demanding the re-introduction of the old obligatory system have been heard recently. 47 According to CIPER, the campaign spending of the two candidates in the second run-off round of the presidential race, Bachelet and Matthei, could have amounted to an increase of 80 % compared with previous campaigns, a fact that is explained at least partially by the new “voluntary” voting system that forces parties to lure voters to the polls with even more propaganda. In 2009, the maximum amount of electoral spending in the presidential election campaign was US$5,000 million. In 2013, it was around US$9,200 million. The campaign spending for parliamentary elections also increased signifi cantly. Why? In Chile, the maximum amount of allowed campaign spending is directly related to the number of voters. Thus, the fi ve million new voters who were automatically inscribed in 2013 increased the maximum amount signifi cantly. In this sense, the newly introduced voting system was a “clever” step to legally increase private donations.

46 F. Miranda y F. Koknic: Los secretos de las empresas que ﬁ nancian la política (II): Mineras, banca, pesqueras, y más, loc cit. 47 J. Atría, quoted according to: Interview with the authors, December 1, 2013. 4 The Political Dimension: Chile After the Presidential… 99

To date, neither Bachelet nor Matthei have unveiled the full list of their donors and the respective amounts, even though Matthei claimed that Bachelet spent ﬁ ve times more in propaganda and went close to the legal limits.

How Realistic Are Serious Reforms?

Against this complex regulatory background, in the weeks preceding the general vote of November 17, 2013, Bachelet was poised to win right from the start. She ran a campaign centered around the promise of changing the existing constitution, reforming the “binomial” voting system, rebalancing the tax system in favour of the lower and middle classes, reforming public pensions, introducing free education, and propagating equal marriage for same-sex couples. Her campaign acknowledged the change of Chileans’ mood—mostly as an effect of the student protest movement—since the fi rst time she was in offi ce (2006–2010). According to a survey of the conservative Think tank Centro de Estudios Públicos ( CEP), 85 % of Chileans support the reduction of income differences and 74 % the introduction of free post- secondary education.48 Bachelet herself summarized her program for 2014–2018 as follows: What are the main challenges for Chile? First of all we have to mitigate the existing social inequality. It’s my government’s most important task—and my very personal commitment to the majority of Chileans. […] This means that we have to improve the quality of life of all Chileans. We need to offer better education, health provision, and social security. We have approved a tax reform, which we now want to implement gradually. The tax returns will be spent on educational reform: We want good, public education for all children and young people. […] Furthermore, our country needs a constitution that has a legitimate origin, which strengthens our democracy and guarantees the rights of the Chilean people. We also want to initiate a new democratic cycle through an electoral law reform including all political and social sectors. In order to achieve this goal, we strive for extensive dialogue. […] All reforms envisaged by my government target the reduction of inequality in Chile and the creation of new opportunities for all—including in particular the middle class. Among the OECD-countries, Chile represents the country with the highest rate of social inequality, and the tax reform will help us to change that. […] Summing up, the political economy of my government aims to mitigate the social and economic imbalances of our country that prevent the next stage of development. We also require a new energy policy that improves energy supply and diversifi es energy production. Our goal is to achieve the changeover to renewable energies of 20% of our energy production by 2025. Additionally, we support an anti-cyclical policy that results in more economic growth and employment: This is why the government raised the budget for public spending by 9.8% for the next year—the largest increase since 2009. We expect public investment to be raised by 27.5%.49

48 Encuestas CEP: Estudio Nacional de Opinión Pública No. 70, Septiembre-Octubre 2013, http:// web.vrserver2.cl/cepchile/encuestaCEP_sep-oct2013-completa.pdf . 49 M. Bachelet, interviewed in: H. Stausberg: Chile will sich eng an Deutschland binden. Präsidentin Bachelet über ihre Erwartungen an Angela Merkel, Chinas Macht und Reformen. In: Die Welt, Berlin October 28, 2014, http://www.welt.de/print/die_welt/politik/article133719433/Chile-will- sich-eng-an-Deutschland-binden.html . 100 R. Benedikter et al.

Without doubt, these are ambitious plans of a nation aiming to change unusually many of its key parameters at the same time—a nation that thus can be reasonably branded “a society in transition”. The reality ahead is a bit more complicated though. The new old president Bachelet will most probably not be able to accomplish these goals by herself by the end of her mandate in 2018, because the post-electoral power constellation is insuffi cient to make the envisaged change on her own, given that she doesn’t have a majority large enough to make change without compromises. Nevertheless, as some candidates linked to the student movement won in the parliamentary elections, and given that part of the center-right seems to be also in favour of some modifi cations, there may be some chance for reforms. With regard to the political dialectics framing these potential reforms in the coming years, Michelle Bachelet’s main objective is to keep the 22 % advantage in public approval she has achieved over the center-right in the elections. In turn, the center-right will be forced to make a turn toward the political center in order to have a chance of having its argument better heard—as former president Piñera did with wit and intelligence when he was a candidate in 2009–10. If the center-right can’t convince the center voters with more liberal proposals regarding reforms, values, grassroot participation, and the economy, it’s probable that the difference in public acceptance between the conservative representatives and Bachelet’s center-leftist coalition will increase rather than shrink. The question is whether such a development would be entirely to the disadvantage of the center-right, or if it could rather turn out to be in its favour by incepting a new “ideological mobilization” of its traditional voter segments that, in part, stayed at home for the 2013 elections, for the upcoming new elections in 2017. On the other hand, the results of the 2013 parliamentary elections showed that the new-old president Michelle Bachelet will have to achieve wider political consensus than she achieved in her fi rst term in offi ce in order to implement at least some basic topics of the reforms proclaimed in her ambitious electoral program. This is due to the situation in which the Senate, the Nueva Mayoría (center-left coalition), has a total of 21 senators, while the Alianza (center-right coalition) has 16, plus an independent senator: Carlos Bianchi. This will allow the Nueva Mayoría to pass regular laws, but not laws that re-interpret the constitution (which would require 22 Senators at least), or laws that change the constitution (which would require 26). As a consequence, Bachelet needs some degree of support from the center-right; and in order to get it, she will have to moderate her proposals, to the detriment of her voter’s expectations. In the House of Representatives (Cámara de Diputados ), Nueva Mayoría obtained a total of 68 Diputados, in comparison to Alianza ’s 48. There are four independent diputados : Giorgio Jackson, Gabriel Boric, Alejandra Sepúlveda, and the liberal Vlado Mirosevic, all of them having vowed to sustain deep-reaching reforms. If it manages to gain their support, Nueva Mayoría would have a total of 72 parliamentarians, enough to pursue part of the changes Bachelet proposes. 4 The Political Dimension: Chile After the Presidential… 101

The Student Protest Movement Within the Current Political Constellation

Considering the overall results, the 38 % obtained by the Alianza in the general elections could be interpreted as opposition of the voters to substantial changes of the existing Chilean model, while from such a viewpoint approximately 50 % would be in favour of such changes. In each and every case, Bachelet, until the end of her term in 2018, will need the support of the elected representants of the student protest movement as well as—with regard to the ongoing social debate—from its non- parliamentary section “on the streets” in order to pursue her goals. From the student’s perspective, though, Bachelet remains an ambiguous fi gure not necessarily to be trusted. One reason for this view—and the lack of student’s euphoria for Bachelet’s victory—stems from her role during the so-called “Penguin Revolution”, i.e. the fi rst wave of protests of Chilean high-school students (called “Penguins” because the colours of their school uniforms) against the educational and political system in 2006 when Bachelet was in the early phase of her fi rst presidency. The protest of “the Penguins” in 2006 was caused by the reform of the LOCE— the general educational law—which induced a broad privatization process of the educational system. After months of demonstrations, Bachelet called for the aid of the Presidential Advising Council, formed by representatives of the professors and rectors of universities, academies, and directors of schools (both high school and university) and by leaders of the student movement. The council was formed by 40 people, six of whom were students, to solve the confl ict. Vasquez Amarales renders Bachelet’s behaviour in 2006 as follows: After some months, the students left the Presidential Advising Council, claiming they were being ignored, and that it was just an instrument of president Bachelet to hide away their protests. Despite this, a new law was proposed to replace the former LOCE: the LGE (General Law of Education in Chile). This law put restrictions to subsidized private schools and regulated the entrance exams to excellence high schools, ignoring other demands: for example the end to municipal school administration, and greater public participation in educational decision-making.50 This experience represents the main diffi culty for the elected student leaders to unconditionally believe in the authenticity of Bachelet’s intended changes. In their view, the question of her authenticity will depend on her ability to emancipate herself from her role as an alleged “marionette” of the powerful leaders of the center- left alliance who, as the students believe, over-proportionally infl uenced her fi rst presidency 2006–2010.

50 J. Vasquez Amarales, quoted according to: Interview with the authors, Santiago de Chile, December 22, 2013. 102 R. Benedikter et al.

Outlook: What Future for Chile Under the Government Bachelet II?

Six months before the general elections, in June 2013, student protest movement candidate Camila Vallejo was asked in an interview if after a potential victory she was afraid of being ignored again by her new “partners” in the “New Majority” constituting the government Bachelet II. Camila preferred to publicly trust Michelle Bachelet and stated: It’s a play. The support of Bachelet doesn’t have any guarantees, but it opens the potential of transformation.51 It is probable that, to prove her sincerity to the students and the middle class, Bachelet will have to extract herself from classical left-right oppositions, which most Chileans see as being still willingly or unwillingly tied to elements of the former dictatorship. That will be easier if, as most Chilean research institutes predict, the right wing of the right loses weight in Chile’s public discourse at least temporarily— which could be the case since it is currently witnessing perhaps its worst moment with regard to popular support since the start of the transition process to democracy. Paradoxically, the trend against the center-right was fostered to a certain extent by the governing center-right president Piñera himself. Piñera supported the candidature of Matthei verbally, but publicly criticized her on other occasions, targeting her standpoint towards the military regime and the violation of human rights. As one of the last steps in Piñera’s legislature, he abolished a law that left violators of human rights in privileged positions. All these were signs of Piñera’s attempt to position himself for his probable next candidacy in the presidential campaign of 2017 as a representative of a new, “modern” and more moderate, centrist right that tries to show a clear “anti-dictatorial” position and thus may be able to emerge from a failed candidacy of the “decisively right” wing (Evelyn Matthei) and a party (UDI) that ﬁ nds itself in an unfavourable historical moment. At the same time, though, any new vision for Chile’s policies will depend on the responsibility of its politicians, irrespective of their ideological siding. It will also depend on how well the more pondered candidates from the student protest movement fare in their new positions. Bachelet’s second presidency could mark the end of Chile’s long transition from dictatorship to democracy. A generation with no fear of new political movements and new ideas has arrived both in the halls of power and in the streets. As a consequence, Chileans, little by little, may be dragged out of their uneasiness ( malestar ) with their political system towards a more propositive—and pro-propositive—position. In the years ahead, they might simply vote for what they believe in, rather than choosing the “lesser evil”. That will perhaps prove to be the best anti-malestar medicine both for the nation as a whole and for its individuals in particular.

51 J. Celis Aburto: Camila Vallejo: “Estar embarazada es coherente con lo que creo”. In: Revista Mujeres de Chile, 18 junio de 2013, http://revistamujeres.cl/camila-vallejo-estar-embarazada-es- coherente-con-lo-que-creo/prontus_revistamujeres/2013-06-18/093644.html . Chapter 5 The Social Dimension: Inequality and Redistributive Policies. Ideas for Reform

Roland Benedikter and Katja Siepmann

For the past couple of years, the topic of growing inequality has become a core issue of the international debate on development. The inﬂ uence of the economic and political elites (who are often one and the same) on the public view of wealth and its desirable role in society have become increasingly salient issues around the globe. As a consequence, the potential answers: redistributive policies through the two main tools of governments: taxation and governmental spending are discussed with great intensity. As Thomas Piketty put it in his book “Capital in the Twenty-First Century,” which since April 2014 has brought the question of inequality to a new central role in the international debate,

The distribution of wealth is one of today’s most widely discussed and controversial issues. But what do we really know about its evolution over the long term? Do the dynamics of private capital accumulation inevitably lead to the concentration of wealth in ever fewer hands, as Karl Marx believed in the nineteenth century? Or do the balancing forces of growth, competition, and technological progress lead in later stages of development to reduced inequality and greater harmony among the classes, as Simon Kuznets thought in the twentieth century? Modern economic growth and the diffusion of knowledge have made it possible to avoid the Marxist apocalypse but have not modifi ed the deep structures of capital and inequality—or in any case not as much as one might have imagined in the optimistic decades following World War II. When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-fi rst, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based […] In a way, we are in the same position at the beginning of the twenty-fi rst century as our forebears were in the early nineteenth century: we are witnessing impressive

R. Benedikter (*) University of California , Santa Barbara , CA , USA e-mail: [email protected] K. Siepmann Opina Market Research Institute , Santiago , Chile e-mail: [email protected]

changes in economies around the world, and it is very difﬁ cult to know how extensive they will turn out to be or what the global distribution of wealth, both within and between countries, will look like several decades from now […] It is long since past the time when we should have put the question of inequality back at the center of economic analysis…1 Such new interest in equality-related topics is not only noticeable in the academic sphere. It has literally shifted to the streets, as the “Occupy Wall Street” and “99 % against 1 %” movements in the USA proved in 2011, one of the few truly international social protest years since the 1960s and 1970s. The year 2011 manifested a remarkably high number of social protests around the globe, among them the “Arab Spring” in Tunisia, Egypt, Algeria, Syria, and Yemen; the “Indignados” in Spain; the “spontaneous” social riots in London and in the banlieue s of France’s suburbs; the partly violent anti-austerity and anti-bank protests in Athens, Portugal, Italy, and throughout the rest of Europe; anti-governmental grassroots and student protests in Moscow and China—an overall constellation that somewhat recalled years like 1969 and 1989, although with less common ground between the different events, and with very different, if not conﬂ icting aspirations. One of the 27 social protest movements in that year 2 was the Chilean student movement, which

Brought the issue of inequality to the forefront of public debate by demanding that the government increases taxation of Chile’s wealthy economic elite to fund massive investment in public education.3 In the same year, the Santiago-based private, nonproﬁ t public policy analysis organization Latinobarómetro declared that not only Chile was witnessing a decade of a changing paradigm, but the whole region. Latin America never has been as prosperous and rich as today. As a result, the continent’s populations have never been as educated, and at the same time as alert and demanding as in the past years.4 The data of 2013 seem to conﬁ rm a trajectory characterized by the combination of growing wealth with growing protests in request of greater justice. Since the start of the century,

Latin America reduced its poverty rate from 44% to 28%, increased its participation in world trade from 5% to 8% and has lived a unique decade. Approximately 50 million of Latin American have become part of the middle class, which represents almost 8% of the whole population of the region. […] Simultaneously, there are still high levels of inequality. It’s the prosperity itself that generates new inequalities. […] The region has protested, people have claimed their piece of the pie, now they want distribution . When there was nothing to distribute, there was only Stoicism in poverty, but now there is demand in face of the existence of assets.5

1 T. Piketty: Capital in the Twenty-First Century: Introduction. Harvard University Press 2014, http://www.hup.harvard.edu/features/capital-in-the-twenty-fi rst-century-introduction.html . 2 K. Anderson: After decades as sideshows, mass demonstrations have regained the power to make history. In: Time Magazine, No. 25/2011, pp. 38ff. 3 T. Fairfi eld and M. Joratt: Top Income Shares, Business Profi ts, and Effective Tax rates in Contemporary Chile. In: International Center for Tax and Development, January 2014, p. 7, http://www.ictd.ac/en/ publications/top-income-shares-business-profi ts-and-effective-tax-rates-contemporary-chile . 4 Cooperación Latinobarómetro: Informe Latinobarómetro 2013, p. 4, http://www.latinobarometro. org/documentos/LATBD_INFORME_LB_2013.pdf . Translation from Spanish by the authors. 5 Ibid. 5 The Social Dimension: Inequality and Redistributive Policies… 105

As mentioned in previous chapters, there are quite ambivalent evaluations of Latin America’s resulting social protest mobilization wave. On the one hand, some argue that the social protests represent a serious threat to the governability of the continent that may foster increased political violence and the rise of semi- authoritarian rules6 as a reaction to or in combination with ethnic factors. The outcome could be the emergence of partly ungovernable areas which de facto could function as “states in the state.” On the other hand, some popular mobilizations are interpreted as an expression of an implicit renewal process of Latin American societies and thus as symbols of “diversity inherent in democracy and peace,”7 and consequently as a “tool and opportunity for making society more egalitarian.” 8 In this view, social protest prevents violence, because it is its legal substitute that follows the rules of open societies. Evaluating the contradictory phenomena, the majority of current analysts seem to be convinced that overall Latin America is in a positive moment of history, with

Signiﬁ cant, realistic, and perhaps unprecedented opportunities to make profound progress in strengthening its democracies and advancing development. 9 But in contrast to the teachings of mainstream Western democracies, the continent’s “unequal democracies” are characterized by “much democracy and little institution,”10 as the Secretary General of the Organization of American States (OAS) José Miguel Insulza put it in October 2013 pointing toward a key weakness inbuilt in most current Latin American social arrangements. This comes with a gen- erously under-taxed elite (compared to their counterparts in other countries) which contributes to keeping inequality enduring and stable. Although this doesn’t imply that taxation should be increased, which as the recent example of the crisis management of Eurozone countries proves is, in most cases, the wrong answer to the question of equality and integration,11 it points toward a structural disproportion typical of Latin America that tends to undermine the perceived legitimacy of institutions.

6 T. Fairfi eld and M. Joratt, loc cit. 7 United Nations Development Programme: Understanding social confl ict in Latin America 2013. Regional Bureau of Latin America and the Carribean (RBLAC), edited by F. Calderon, New York 2013, p. 15, http://www.undp.org/content/dam/undp/library/crisis%20prevention/Understanding% 20Social%20Confl ict%20in%20Latin%20America%202013%20ENG.pdf . 8 Ibid. 9 Ibid., p. 10. 10 Cooperación Latinobarómetro: Informe Latinobarómetro 2013, loc cit., p. 4. 11 Cf. R. Benedikter: Mario Monti’s Italy and the European debt crisis. In: Korea Review of International Studies (KRIS). Edited by the Global Research Institute, The Graduate School of International Studies, Korea University Seoul, Volume 14, Issue 2/2011, Seoul 2011, pp. 3-36, http://gsis.korea.ac.kr/gri/contents/2011_2/14-2-01_Roland_Benedikter.pdf and http://gsis.korea. ac.kr/gri/contents.html; and R. Benedikter: Austerity plus growth: Europe’s winning combination? “Focal point” essay series: The EU: Broken or just broke? (Other contributors: Jürgen Habermas, Jacques Delors, José Ignacio Torreblanca, Ulrike Guèrot). In: Eurozine. Europe’s leading cultural magazines at your fi ngertips: The most important articles on European culture and politics. Year 15, Issue 6/2012 (June), Bruxelles and Vienna, June 15, 2012, pp. 1-12, http://www.eurozine.com/ articles/2012-06-15-benedikter-en.html . 106 R. Benedikter and K. Siepmann

In 2011, the level of inequality in Latin America was still 60 % higher than the OECD average, and if compared to other world regions, similar numbers are only found in strongly underdeveloped areas, such as sub-Saharan countries.12 Thus, the two main questions to address with regard to social development are: – First, will we really witness qualitative changes in the logics of (re-) distribution in Latin America’s societies in the years to come? And is Chile, the area’s most developed country, really at the forefront of this trend, as the government Bachelet II asserts? – Second , is Chile in 2014 really heading from previous (successful, but socially unequal) patterns toward a new era of social integration? And can it therefore become a role model for the region, as envisaged at least rhetorically both by the previous government of Sebastián Piñera and by the current one of Michelle Bachelet?

The Latin American Paradox: Reproduction of Inequality as a Historical Constant Despite Democratization?

First, in face of the continent’s recently successful economic history the persistence of high rates of inequality seems to be surprising to many:

Almost all Latin American countries are still marked by extreme forms of social inequality— and to an extent, this seems the case regardless of national differences in the economic development model or the (respective) strength of democracy and the welfare state… None of the economic strategies pursued, which differ considerably (compare, for example, import-substituting industrialization from the 1930s onwards and market radicalism in the 1980s), seem to have signifi cantly reduced the rates of inequality. […] As a result, the persistence of inequality in Latin America is a tough challenge…, in particular because it seems to contradict crucial aspects of the dominant theories of democracy and social policy, which refl ect mostly European and North American experiences.13 As a consequence, the understanding of the current stage of development of the Southern American continent, and of Chile at its forefront, requires a high degree of contextual sensitivity. The international picture of a growing and increasingly prosperous region does not necessarily coincide with a higher satisfaction of life for the average citizen. For example, Jeffrey Winters, political scientist at Northwestern University, has pointed out that material (economic and fi nancial) inequality most commonly engenders political inequality, which allows sections of the elite to block public

12 United Nations Economic Commission for Latin America and the Carribean (UNECLAC/ CEPAL): Panorama Social de América Latina 2011, Santiago de Chile 2011, http://www.eclac.cl/ cgi-bin/getProd.asp?xml=/publicaciones/xml/1/45171/P45171.xml&xsl=/dds/tpl/p9f.xsl&base=/ dds/tpl/top-bottom.xsl . 13 H. J. Burchardt and N. Weinmann: Social Inequality and Social Policy outside the OECD. A New Research Perspective on Latin America. ICDD Working Papers, Kassel 2011, pp. 1 and 4. 5 The Social Dimension: Inequality and Redistributive Policies… 107 policies that might erode their fortunes (for example, through the reevaluation of taxation) in order to maintain the status quo .14 Instead of categorizing Latin America’s unequal democracies as “unfi nished,” “fl awed,” or “diminished subtypes”15 of the “Western original,” Jürgen Burchardt and Nico Weinmann, two political and social scientists, understand Latin America’s social policy rather “as a very successful relation of political domination.”16 For Burchardt and Weinmann, the essence of what they call the Latin American Paradox is the existence of “an exclusive-democratic welfare state,”17 which “consists of a form of (re)production of inequality that enjoys democratic legitimacy.”18 According to James Robinson, professor of Government at Harvard University, there seems to be even a specifi c Latin American equilibrium . 19 Burchardt and Weinmann explain that it is

…a balance of forces achieved through a limited form of coordination among elites, which enables certain groups to persistently defend their privileges, despite the existing pressures to adjust. […] Because the welfare state has been enjoying democratic legitimacy for… decades, it appears that there is either a regional consensus accepting inequality, or (and this is more likely considering the opinion polls) that the speciﬁ c structure of Latin American democracies systematically prevents the majority of people from enjoying social participation, despite the existence of political freedom and political-legal equality. 20 If existent, and the “binomial” voting system in Chile discussed in the previous chapter could be an indication pointing in that direction, such mechanisms would not only manifest as a Latin America-speciﬁ c phenomenon, but could also be increasingly symptomatic of a basic characteristic of capital within the current stage of globalization, as pointed out by Piketty. This characteristic consists of conjoining the democratic structure of open societies that is necessary for market capitalism with the factual exertion of power by an always smaller number of the wealthy and with social stability—not least through the combination of a minimum of welfare with an omnipresence of media propaganda and distraction which has rightly been referred to as “tittytainment.” 21 In fact, Latin America remains an example of social inequality combined with an accentuated power concentration under democratic rules, with a strong connection between the public political debate and the media sphere dominated by private

14 J. Winters: Oligarchy. Cambridge University Press, New York 2011. 15 D. Collier and S. Levitsky: Democracy ‘with Adjectives’: Finding Conceptual Order in Recent Comparative Research. Westview Press, Berkeley 1995. 16 H. J. Burchardt and N. Weinmann: Social Inequality and Social Policy outside the OECD, loc cit. 17 Ibid., p. 9. 18 Ibid., p. 16. 19 J. A. Robinson: The Latin American Equilibrium. In: F. Fukuyama (ed.): Falling behind. Explaining the Development Gap Between Latin America and the United States, Oxford University Press New York 2008, pp. 161-193. 20 Ibid, p. 15. 21 H.-P. Martin and H. Schumann: The Global Trap: Civilization and the Assault on Democracy and Prosperity, St. Martins Press 1997. 108 R. Benedikter and K. Siepmann interests. Chile remains one of the regional role models of this combination; but the Latin American equilibrium can also be currently found, at least in milder forms, in other world regions too. Perhaps we could even speak of an emerging global equilibrium of inequality within an international net of asymmetric economic and political power relations.

Chile and the Ending of the Era of the Concentration of Wealth: The End of the Latin American Equilibrium ? The Emergence of a New Class-Consciousness—And the Potential Consequences

In order to get closer to the issue, we have to tackle some practical examples. Social progress is often measured by upward mobility within the socioeconomic classes. But do changing classiﬁ cations (e.g., “approximately 50 million of Latin Americans have become part of the middle class”22 ) really mirror qualitative shifts in the overall societal tissue and in its basic mechanisms? In 2009, the World Bank’s international analysis of social classes allocated 53 % of Chileans to the lower class, 43 % to the middle class, and 5 % to the upper class. 23 Latinobarómetro compared these data by providing the “self - classiﬁ cation of social classes” in Latin America that includes subjective variables related to intangible and nonmonetary values, for example perception of status, power distribution, and political participation:

The self-classifi cation of class is not an absolute and objective measurement of a certain quantity of assets, but rather a relative measurement of the (perceived) position of each member in a given society. […] The poor are not only poor in assets, but are also poor in ‘power’. Power is the ability of decision-making, the control over one’s life, the existence of human dignity and the possibility of being an actor in one’s social group. 24 Equally important, power depends on how it is perceived by whom. In general, power belongs to those who perceive it is available to them, and it doesn’t to those who don’t—irrespective of the realities in play. In 2013, 68 % of Chile’s population situated (i.e., perceived ) itself in the lower class (cf. World Bank “objective” data: 53 %), 30 % in the middle class (World Bank: 43 %), and 2 % in the upper class (World Bank: 5 %). Comparing these data on a regional level, Chile turns out to be the nation with the largest “objective” underestimation of lower class affi liation (discrepancy: 15 %) and the largest over- estimation of middle class affi liation (discrepancy: 12 %) in relation to the citizens’ self-perception. The opposite extreme of disparity between the socioeconomic classifi cations of the World Bank and Latinobarómetro ’s self-classifi cation was Bolivia,

22 Cooperación Latinobarómetro: Informe Latinobarómetro 2013, loc cit., p. 4. 23 Ibid., p. 70. 24 Ibid., p. 70. Translation from Spanish by the authors. 5 The Social Dimension: Inequality and Redistributive Policies… 109 where the World Bank diagnosed a lower class of 82 %, a middle class of 17 %, and an upper class of 1 %. Latinobarómetro ’s polls in Bolivia in turn have given a different picture: 39 % lower class, 53 % middle class, and 5 % upper class.25 The authors commented on the somewhat surprising—and sharply differing—results of class-consciousness and power-perception in Chile and Bolivia:

The re-distribution of power in society is probably the most complex process in the transition from a traditional to a modern society, i.e. during the step from under-development to development. In a modern society there is meritocracy, reward of efforts, value of invention and innovation, value of work and a sense of fairness in competition. Power is not co-opted by groups, and the government works for the majority, not for particular interests (at least in the perception of the people). The empowerment of individuals is not only rhetoric, but really exists, and there are appropriate institutional answers to civil requests and appeals. People can complain without being sanctioned, and workers can express their demands through unions in order to access negotiations. Voters can infl uence and punish politicians through their vote. Finally, the list of civil powers is not restricted, but large. But in countries like Chile, the majority of citizens still has not enough ‘intangible assets’ (such as self-esteem and individual sense of empowerment, author’s note) to be classifi ed as middle class, since many of Chile’s citizens feel expropriated of these powers, which at the same time they believe to be a citizen’s right. In contrast, in Bolivia citizens fi rst obtained the intangible assets of social status, leaving in second place the receipt of tangible assets. Chile in turn has been very successful in the production of tangible assets, Bolivia not. In a phrase: while Bolivia has distributed a sense of empowerment, Chile has produced goods. Now the situation could become reverse: Chileans are demanding distribution of power, which means the production of intangible assets like individual empowerment and social status, while Bolivians demand participation in the production of tangible goods. In both cases the measurement of merely economic indicators gives little information on the practice of social positioning and citizens’ status in Latin American societies.26 Whether material wealth without appropriate perception of individual empowerment such as exists in today’s post-Piñera Chile is preferable to a subjective perception of empowerment without material wealth such as that of the “seriously socialist” society of Bolivia under the “Movement of Socialism” (MAS) leader Evo Morales is in our view open to discussion. Experience teaches that if people have to choose, a majority usually prefers the fi rst option: wealth without empowerment. Nevertheless, in democratic societies it is the experience of empowerment that creates wealth in the long term, since it mobilizes creativity and ambition, and thus a striving economy dependent on healthy political dialectics between self-confi dent individuals. That means irrespective of whether the cycle toward innovation in democratic societies starts with wealth or with empowerment, it will be successful over a longer period of time only if both aspects are included. Consequently, the asymmetry between tangible and intangible “goods” and between material wealth and immaterial self-perception in current Chile leads to a paradoxical situation—which ensures that “transition” is not an option, but a necessity for the nation. Latin America’s richest country, the “Switzerland of the South”

25 Ibid., pp. 71ff. 26 Ibid., p. 72. Translation from Spanish by the authors. 110 R. Benedikter and K. Siepmann in the self-perception of its citizens, has the continent’s largest lower class (68 %) and smallest upper class (2 %). This is practically the opposite of the panorama drawn by the World Bank: Here, Chile is the country with the largest upper class (5 %) and one of the countries with the smallest lower classes (53 %); only Argentina (51 %) and Uruguay (40 %) were ranked with a smaller lower class. How is this divergence possible?

Chile’s Social Psychology Today: A 50:50 Divide Between “Doing Well” and “Struggling to Survive.” Can This Be Representative of the Most Successful Nation of the Continent?

It seems that the perceived economic pressure on the everyday life of Chile’s citizens, psychologically linked to the asymmetry between wages and prices, “absent institutions,” and growing competition in many sectors, is underestimated, particularly from an outside perspective. Eduardo Hamuy, one of Chile’s most esteemed sociologists and pioneer of the global research on inequality, invented the measurement of “subjective income” which today is used around the globe to investigate patterns of inequality, with the goal of identifying more than simple economic patterns.27 “Subjective income” neither measures monetary and wealth values per se, nor the qualitative self-evaluation of one’s situation (good or bad) alone, but rather the relationship between needs of subsistence, the corresponding fi nancial resources to satisfy these needs and the perception of the overall situation. In 2013, 50 % of Chileans declared that “our money is not suffi cient, we have problems” (“No les alcanza , tienen difi cultades ”) or “our money is not suffi cient, we have serious problems” (“No les alcanza , tienen grandes difi cultades ”). 28 Thus, Chile’s population seems to be split in two halves: 50 % seem to be assured of a good livelihood and the other 50 % have to struggle to reach the end of month.29 In contrast, only 37 % of the—in a national comparative perspective much poorer— Bolivians stated that they have an insuffi cient income to satisfy their needs. Considering the greater region, in 2013 there were only 8 of 18 Latin American countries where half of the population (or more) declared that their money was not suffi cient (Honduras 65 %, Dominican Republic 62 %, Nicaragua 60 %, Guatemala 60 %, El Salvador 55 %, Mexico 52 %, Colombia 52 %, Chile 50 %).30 Without doubt, for some countries this analysis shows little accordance with the “objective” statistics of development based on material values, economic performance, and wealth alone. The “subjective income” and the “self-classifi cation of

27 Cooperación Latinobarómetro: Informe Latinobarómetro 2013, loc cit., p. 57. 28 Ibid,. p. 57. 29 Ibid., p. 57. 30 Ibid., p. 57. 5 The Social Dimension: Inequality and Redistributive Policies… 111 social class status” rather represent relative elements of measurement which strongly relate to social psychology, which is always highly subjective due to the different needs, ideas, imaginations, public and private founding myths, civil religions, and living standards of people. Nevertheless, these “subjective” data seem to be crucial to understand the shifts of mindsets in the respective regions and to better compre- hend social protests within the speciﬁ c structure of Latin American societies. In summation, the “greater picture” of Latin America in 2014 shows a region where an average of 44 % of the population perceive that they do not have enough money to satisfy their needs. This represents a historical low point since the beginning of the “subjective income” analysis in South America in 1995 (with peak values in 2003 [62 %] and 2009 [55 %]).31 Chile, as the richest country of the region, performs below average (50 %) in the self-perception of its citizens. Depending on the perspective, the overall picture is good and bad news:

Latin America’s [unique] decade has produced two populations: one with increasing income, improved economic situation, and citizens who have enough money for living. They comprise half of the region’s population, more or less 300 million. The other half has problems managing life. We are right in the midst of an economic dichotomy, where prosperity is only satisfying for one of every two, while the other is waiting at home to receive the invitation for the party. 32 While this is without doubt a pointed metaphor of Latin America’s social situation, it nevertheless illustrates the core problem that remains at the center of most South American societies, including its “economic gem” Chile: (Perceived) inequality.

Education: The Prerequisite for the Acquisition of “Intangible Assets”

In fact, even though the real income gap is larger in other Latin American countries, the perception of disparity is most pronounced in contemporary Chile. In Latinobarómetro ’s study of 2013 Chile appears as the country with the highest perception of injustice with regard to domestic GDP and wealth distribution. Only 10 % of Chileans feel that the distribution of wealth is “fair” (“justa ”) or “very fair” (“ muy justa ”).33 Critics could argue that the combination of objective national well- being, growing protest and subjective discontent is just a mirror of the Maslow pyra- mid of needs: the higher the acquired standard of material well-being, the higher the dissatisfaction rates and the level of demands. Without doubt, this may be one aspect of the overall picture; but it is certainly not the only one.

31 Ibid., p. 57. 32 Ibid., p. 58., Translation from Spanish by the authors. 33 Ibid., p. 77. 112 R. Benedikter and K. Siepmann

That is to say, the “objective” rates of inequality position Chile in asymmetry to its overall economic performance; but the subjective, sociopsychological perception of inequality is even worse. While on average 7 out of 10 Latin Americans are unsatisﬁ ed with the functioning of the economy and the mechanisms of participation in growth and income distribution in their country, in Chile it is 9 out of 10. 34 Chile’s new generations have grown up with the omnipresent discourse of the astounding national success of the neoliberal economic model, but are increasingly confronted with lines of fracture between narration and reality. Giorgio Jackson, one of the Chilean student leaders of 2011, stated accordingly:

But what is this famously successful Chilean model in its domestic reality? The principal characteristic of the Chilean system is the simultaneous production of many different Chiles. We are living in a fragmented nation, which nonetheless is presented as the ‘jaguar of South America’ to the outside world. 35 So what to do in this situation? Where are ideas for progress? One instrument to achieve greater equality, social mobility, and fairness of chances in a medium-term perspective seems to be immediately at hand: Education . In fact, Chile’s 68 % who count themselves as “lower class” and who seem to lack crucial self-ascribed “intangible assets,” i.e., status, political power, vertical mobility, simultaneously possess the most important intangible asset—education, which by all appearances is the prerequisite for most others. It was the expansion of higher education to the middle and lower classes through privatization and high- interest loans since the 1990s that decisively cocreated the present Chilean mindset:

The expansion of education as a resource to sectors that were historically excluded was a key component of the Chilean students’ [new] identity as a collective actor: they had access to new educational opportunities and, at the same time, they were demanding conditions that would allow them to take the largest possible advantage of these opportunities. […] In other words, if the massiﬁ cation of education does not by itself solve the problem of equal opportunity (thus making education appear as a [luxury or] grievance), it nevertheless generates new social conditions to generate solutions (education as a [socio-political] resource).36 Chile’s student protest movement since the 2000s could in this view be interpreted as the mobilization of an increasingly critical intellectual mass that had achieved a sufﬁ cient level of education to discern the systemic ambiguities of the economic and political model in play. Already from the 1970s onward, mass access to higher education created a nonuniform group of Chilean intellectuals, which increasingly deposed the elite of their status as the only leading moral authority in

34 Ibid., p. 78. 35 G. Jackson: El país que soñamos. Santiago de Chile 2013, p. 25. Translation from Spanish by the authors. 36 D. Salinas and P. Fraser, Pennsylvania State University: Educational Opportunity and Contentious Politics: The 2011 Chilean Student Movement, loc cit., p. 37. 5 The Social Dimension: Inequality and Redistributive Policies… 113 the country.37 This process was also responsible for the emergence of alternative narrations of society, as we have sketched in the previous chapters. From a sociological perspective, Chile’s students constitute in many ways a “new kind of middle class” less because of their economic resources, but rather because of their cultural capital. They were and remain a broad and heterogeneous group with (very) different economic backgrounds, class origins, sociopolitical afﬁ liations, and interests. 38 But although there is a high level of pluralism and het- erogeneity, a common ground and perspective is shared. Therefore, the irony inbuilt in the overall Chilean scenario is that the mobilization which started with student criticism of the (in their view) insufﬁ cient quality of education led to the creation of the preconditions of general social change, i.e., of society as a whole, by demanding principal alterations of institutional and sociopolitical arrangements.

Systemic Reproduction of Conﬂ icts

Given the extraordinary “complexity of [contemporary] social confl icts in terms of their structure, intensity and orientation,”39 the analysis of social and political movements in current Chile further requires a dynamic comprehension of the relationship between past, present, and future, since even allegedly failed movements have often been successful in creating a large repertoire of subsequent, even if not always con- sciously intended, effects.40 In accordance with the “concept of retrospect”41 (Peter Mörtenbeck, Helge Mooshammer) and the approach of “asynchronous change”42 (Gino Germani), the achievement of Chile’s social movement since 2011 seems to have been less the modifi cation of the neoliberal socioeconomic system than a general shift in values and the formation of a broader awareness of the inherent logics of Chile’s otherwise successful model that also tends to foster the systemic reproduction of inequalities. To put it in one phrase: The Chilean student movement articulated the desire of change, but did not until recently embody change itself. Only after the victory of Michelle Bachelet in the 2013 general elections have the students’ demands for equal opportunities and the reform of institutions, education, taxation, and modifi - cation of the electoral system arrived on the political agenda. Nevertheless, the

37 F. Nummi: “La educación no se vende, se deﬁ ende!” El movimiento estudiantil chileno 2011, Stockholm University, http://su.diva-portal.org/smash/record.jsf?pid=diva2:491864 , p. 24. 38 Ibid. 39 United Nations Development Programme: Understanding social conﬂ ict in Latin America 2013, loc cit., p. 13. 40 P. Mörtenbeck and H. Mooshammer: Occupy: Spaces of Protest [Occupy: Räume des Protests], Bielefeld 2012, p. 144. 41 Ibid. 42 G. Germani: Change and social classes in Italy [Mutamento e classi sociali in Italia]. Liguori Editore, Napoli 1981. 114 R. Benedikter and K. Siepmann

“stratifi ed delay” of the effects of Chile’s student protest movement is probably even broader, and should not be underestimated for the coming years, even if these effects go hand in hand with the apparent fading away of the movement itself as a public actor on the streets. Importantly, not only current Chile, but in differing ways the whole Latin American continent too is going through a process of (conscious and unconscious) social refl ection. Social (inequality) reproduction confl icts seem to have become a main reason for social mobilization across Latin America once again, as the study of the United Nations Development Programme of 2013 “Understanding Social Confl ict in Latin America”43 has indicated. Besides the two other spheres of confl ict in contemporary Latin America—ethno-nationalist and cultural confl icts— the logics of “social reproduction confl icts” on the continent are described by the UN as following:

Social reproduction refers to the capacity of a society to reproduce itself and change over time. It is associated with basic factors of reproduction, such as food, health, education, and income, as well as broader factors related to quality of life, wellbeing, dignity, and the basic conditions for real liberty. Social reproduction refers to the very reproduction and value of human life, and it is essential for any institutional, cultural, or political activity. […] In other words, [it is] related to the quality of change that occurs in society and its economy. In this sense, the binary logics of equality-inequality and inclusion-exclusion, in their multiple dimensions, are the key axes of the conditions for social reproduction. 44 At the center of the current Chilean discussion on the best way to handle these conditions are the “sources of revenue” that any state apparatus must possess simply to ensure its own reproduction and at the same time to ﬁ nance social and institutional innovation, for example, the expansion of public health or the improvement of education.45 In previous years none of Chile’s leaders, either from the right or the left, missed an opportunity to underscore the limits of domestic extraction of revenue via taxation. On the other hand, the structure of Chile’s tax system and the allegedly widespread practice of evading taxes have become major grievances among the middle and lower classes and thus are central to their perception of wealth and growth participation as well as to the reproduction of the social status quo in the Andean state, be this perception right or wrong.

Reform Based on Pondered Diagnosis

All this points toward the important, if not outstanding role of the student protest movement in triggering the present status of Chile as a self-perceived “society in transition”—which is a positive achievement in the end.

43 United Nations Development Programme: Understanding social conﬂ ict in Latin America 2013, loc cit., p. 31. 44 Ibid. 45 H. J. Burchardt and N. Weinmann: Social Inequality and Social Policy outside the OECD, loc cit., p. 19. 5 The Social Dimension: Inequality and Redistributive Policies… 115

Nevertheless, there are without doubt shortfalls and failures of the protest movement too. For example, the student protest movement has fallen short in its ability to advance proposals of reform with regard to equality, taxation, and rational redistribution of wealth based strictly on empirical and statistical material, relying on both objective and subjective parameters and in the ideal case on a combination of both in a sober and tranquil way. All too often, it has replaced diagnosis with agitation. Serious—and lasting—reform is always based on sober diagnosis involving, as much as possible, all viewpoints on the issue, including those of the liberals and the conservatives as well as those of the left and the right. In contrast, too often in recent years the battle cry of the street brought its own, often not constructive, logic to the Chilean reform debate. Thus, it is now time for a more tranquil and balanced view on how the complex issue of state income and its desirable redistribution in Chile and thus of social participation of the classes may be mastered in the interest of all. A simple class ﬁ ght according to traditional patterns is unlikely to produce any lasting, structural progress, as the history of other Latin American countries such as Venezuela and Ecuador teaches. Therefore, a more pondered departure point is needed.

The Archimedean Point for Restructuring the Balance Between State and Citizen: Taxation?

One “objectively” discussable issue considered by many as the “Archimedean point” for restructuring the balance between the differing approaches to what the upcoming balance between state and citizen in Chile should be is taxation. The respective Chilean debate is not an isolated one, but part of a greater international, if not new global debate on the future role of taxation in a globalized and highly permeable economic and ﬁ nancial system, as kicked off by the critics of neoliberalism since the 2000s and recently pushed by economists such as Thomas Piketty. In Chile, the government of Michelle Bachelet II has taken this debate up in the form of a proposal for an encompassing and partly radical tax reform. The empirical base for tax reform in Chile relies on a study conducted by Michel Jorratt, appointed as director of the Chilean Tax Service ( Servicio de Impuestos Internos , or SII ) in March 2014. His nomination has indeed been seen as one symptom among many of a changing paradigm in Chile—at least at a symbolic level. In 2010, the Piñera administration had appointed an ex-member of PricewaterhouseCoopers, the world’s second largest professional services network, Julio Pereira, as director of the Chilean Tax Service to inspect the correct payment of taxes by a good portion of companies that had been his very clients at PWC before he assumed the directorship.46 Subsequently, in 2012 Pereira was forced to renounce his ofﬁ ce after being associated

46 F. Mardones: Los confl ictos de interés que penan a las autoridades de Piñera. In: Diario UChile, March 16, 2010, http://radio.uchile.cl/2010/03/16/confl ictos-de-intereses-continuan-persiguiendo- a-las-autoridades-del-gobierno-de-pinera . 116 R. Benedikter and K. Siepmann with inappropriately helping to write off US$125 million for the company Johnson’s, which was later sold to Cencosud for US$100 million.47 After this debacle, the appointment of Michel Jorratt was seen as a new start to address the very complex Chilean tax issue. Thanks to his long career in the Chilean tax audit, Michel Jorratt seems to have broad technical knowledge of the “systemic asymmetries” in the Chilean tax law and the overall standing of Chilean taxation within the international system, in particular within the framework of OECD countries.48 Chile’s new director of Tax Service has been working for the Chilean tax institution since 1991, fi rst as Director of Studies from 1994 to 2007 and later as collaborator of the advisory committee and consultant of Chile’s State Budget Management (Dirección de Presupuestos, or Dipres ).49 As one of his fi rst actions in charge, Jorratt publicly diagnosed:

In the (Chilean) tax system there is a series of tax exemptions and beneﬁ ts which enable companies not even to pay [the already low] 17% [former corporate tax rate, today 20%], but less, i.e. only 13% or 15%.50 Before his nomination, Jorratt, together with Tasha Fairﬁ eld published a study in January 2014 based on the full universe of Chilean tax returns for 2005 and 2009. It analyzed—as a novel feature—

not only business profi ts that are formally distributed to individual taxpayers, but also the very large proportion of profi ts that are perpetually reinvested in Chilean fi rms. We thus contribute to emerging research on income from wealth and capital—whether realized or not.51 The investigation in the—current and projected—relationship between income from labor and income from wealth and capital is a feature long requested by critical economists, including the “Institute for a New Economic Thinking” (INET) New York,52 the “Critical Economists Initiative” of the “Think Tank on Economic

47 P. González: Ante escándalo por condonación de millionarias intereses a Johnson’s comisión de la Cámara buscará investigar lo que ocurre con grandes empresas que evaden impuestos. In: Cambio 21, June 11, 2012, http://www.cambio21.cl/cambio21/site/artic/20120608/pags/ 20120608174205.html . 48 M. Jorratt: Visión Panorámica del Sistema Tributario Chileno y Propuestas de Reforma. In: https://docs.google.com/presentation/d/1DlIHJQOYpA_NzbbEUebiHYqozTz9q1cyoOXZiUe PlH8/edit?pli=1#slide=id.p15 . 49 P. Toroyo Bustamente: Michael Jorrat es el principal candidato para encabezar el SII en el nuevo Gobierno. In: Pulso Chile Economía, February 14, 2014, http://www.pulso.cl/noticia/economia/ economia/2014/02/7-38461-9-michael-jorratt-es-el-principal-candidato-para-encabezar-el-sii-en- el-nuevo.shtml . 50 Ibid., http://static.pulso.cl/20140213/1898217.pdf , p. 9. 51 T. Fairfi eld and M. Jorratt: Top Income Shares, Business Profi ts, and Effective Tax rates in Contemporary Chile. In: International Center for Tax and Development, January 2014, ICTD Working paper 17, p. 9, http://www.ictd.ac/sites/default/fi les/ICTD%20WP17.pdf . 52 The Institute for New Economic Thinking (INET): http://ineteconomics.org/ . 5 The Social Dimension: Inequality and Redistributive Policies… 117

Ethics” Berlin53 and scientifi c investigators such as Thomas Piketty. Already in 2011 critical intellectual platforms like Ciperchile investigated the enormous tax benefi ts generated in the mining sector and interpreted their fi ndings in a twofold manner: – First, that it showed that there seems to be over-proportional lobbying, private expertise, and know-how about taking advantage of the system. – Second, a state apparatus trying to advance the breathtaking growth speed of transnational companies in Chile by all too generous taxation.54 Since data on tax returns have long been a highly sensitive issue—not only in Chile, but worldwide— Jorratt’s 2014 paper has been seen as basic piece of the puzzle regarding a potential (as president Bachelet programmatically put it) “new cycle“(“nuevo ciclo ”) in the relationship between private enterprises and the public good in Chile. While it would be hard to fi nd any citizen in the world who doesn’t have problems with its national taxation system, Chile seems currently to be an example of scenarios of transition (among others in present OECD countries) more openly and broadly discussed than in other nations (for example, in Italy). Fairfi eld and Jorratt explain the basic patterns of Chilean inequality via taxation as follows:

Estimating the distribution of retained profi ts in Chile is critical because the country has a unique ‘integrated income’ tax system that creates strong incentives for business owners to avoid […] withdrawing profi ts. Chile’s corporate tax serves as a withholding (advance payment) against personal income taxes that owners are required to pay when they receive distributed profi ts. Corporate taxes already collected at the enterprise level are credited against the recipient’s personal income taxes when dividends are distributed, so that profi ts are not double-taxed. However, distributed profi ts enter into the personal income tax base, and personal income is subject to progressive marginal tax rates up to 40 per cent. Because the corporate tax rate (17 per cent between 2004 and 2010; currently 20 per cent) is much lower than the top personal income tax rate (40 per cent), business owners leave the majority of their profi ts in the fi rm. According to tax agency fi gures, on average only one-third of profi ts are distributed annually. In addition, independent professionals commonly incorpo- rate their earnings [into the enterprise tax] to avoid paying the much higher personal income tax rates. [But] retained profi ts and incorporated income are not always channeled into productive investments. Owners fi nd both legal and illegal ways to consume profi ts without declaring dividends and hence without paying the corresponding individual income tax: for example, luxury vehicles for personal use may be registered to the fi rm ([which could be called] avoidance), or distributed profi ts may simply be omitted from tax declarations (evasion). Another frequent avoidance mechanism entails using capital gains to withdraw

53 U. Thielemann, T. von Egan-Krieger’s and S. Thieme: Für eine Erneuerung der Ökonomie. Memorandum besorgter Wissenschaftler/102 Professors of the German-speaking World Issue Memorandum for Paradigmatic Openness and the Integration of Ethical Refl ection into Economics as Social Science. Denkfabrik für Wirtschaftsethik Berlin, March 2012, http://www.mem- wirtschaftsethik.de/memorandum2012/ . 54 M. Ramos: Los enormes benefi cios tributarios a los que acceden las empresas mineras en Chile. In: Ciperchile, July 19, 2011, http://ciperchile.cl/2011/07/19/los-enormes-benefi cios-tributarios- a-los-que-acceden-las-empresas-mineras-en-chile/ . 118 R. Benedikter and K. Siepmann

profi ts. [For example], an owner can buy a property, sell it at a higher price to a business in which he or she owns shares, and pay no tax on the capital gain. Income tax evasion [in Chile] is estimated at 46 per cent, essentially all of which is associated with distributed profi ts and dividends. It is diffi cult for the tax agency to control under-declaration of this type since most businesses are organized as partnerships rather than publicly-traded corporations, and the tax agency therefore cannot obtain information on the distributed profi ts from a disinterested third party. Ignoring retained profi ts in income distribution studies therefore signifi cantly underestimates the vast material resources at the disposal of Chile’s economic elites. […] However, corporate tax is not only an important source of revenue in Chile (43–50 per cent of total income taxes in recent years), it is in practice the only tax ever paid on corporate profi ts given widespread personal income tax avoidance and evasion.55 That in essence means that instead of collecting up to 40 % of tax revenues, as foreseen by the offi cial personal income taxation scheme, Chile is collecting in most cases only up to 20 %, i.e., according to the enterprise taxation schedule, on personal incomes and in particular on the incomes of the wealthiest. Another (twofold) reason for the limits of public “sources of revenue” in Chile is On the one hand that most fi rms collaborate with the leading global tax consultant companies (for example, PricewaterhouseCoopers, Ernst & Young) and excellent lawyers of international stature in very sophisticated tax planning. And on the other hand that some former employees of Chile’s National Tax Service regularly serve as advisors of the big companies—all of which is legal. One former lead employee, for example, is now working for several fi rms (among them highly lucrative mining companies) and stated in 2011:

Planning is not elusion, and less it is evasion. It’s about doing things well for the future and trying to save taxes. 56 This former public employee also explained one of his “favorite practices” for companies which have a branch in Chile and other branches abroad: Transfer prices .

Depending on the taxation in different countries, you play with transfer prices [purchase and sale prices] to increase the loss in one country or to reduce the taxable income in another. To control this, the Chilean Tax Service would need exact coordinates for taxation in different places and for the [respective, ever-changing] auditing of prices. These are exactly the limits of the [national] Tax Service.57 This is not just a problem for Chile. While these practices of international enterprises in the past decades have been absolutely legal and thus common around the world, in recent years they have been coming under increasing critique and scrutiny, particularly in the USA and in Europe, not only with regard to the domestic issues of their enterprises, but also to their business abroad. Chile remains one of the

55 T. Fairfi eld and M. Joratt: Top Income Shares, Business Profi ts, and Effective Tax rates in Contemporary Chile, loc cit., p. 9. 56 M. Ramos: Los enormes benefi cios tributarios a los que acceden las empresas mineras en Chile, loc cit. 57 Ibid. 5 The Social Dimension: Inequality and Redistributive Policies… 119

countries where tax investigation is the job of the National Tax Service and thus remains in most cases confi ned to domestic issues, whereas in other nations companies regularly have to prove that prices are not artifi cially blown-up or shrunk in transnational inner-enterprise games.58 Furthermore, these mechanisms, now widely known to the public, contribute in part to the population’s perception of companies and the elite making a joint effort to deprive the state of its sources of revenue. At the same time, these practices seem to contribute to position Chile among the global leaders in top incomes and in inequality, as Jorratt and Fairfi eld observe:

Our results indicate that the concentration of income and profi ts in Chile is among the highest currently estimated in the top incomes literature—although uncertainty associated with the distribution of undeclared distributed profi ts and the lack of comparable studies analyzing retained profi ts prevent us from confi dently ranking Chile among the other income inequality leaders (the U.S., Argentina, Colombia and South Africa). When only distributed profi ts are included in the income defi nition, we conservatively estimate that the top 1 per cent of adults receive an income share of 15 per cent, while the top 0.01 per cent receive 1 per cent. These shares increase substantially when we adjust distributed profi ts for under- declaration. Depending on the assumptions employed to impute undeclared profi ts, estimated shares range from 22–24 per cent for the top 1 per cent, and 1.6–5.9 per cent for the top 0.01 per cent. When the income defi nition includes accrued profi ts instead of distributed profi ts, the top 1 per cent shares range from 19 per cent (unadjusted) to 32–33 per cent (adjusted for under-reporting), while the top 0.01 per cent shares rise to between 4 per cent (unadjusted) and 6–7 per cent (adjusted for under-reporting). Despite this impressive concentration of income, effective income tax rates paid by the richest Chileans are quite modest. The top 1 per cent pay an average effective rate of 16–17 per cent when distributed profi ts are not adjusted for under-reporting, and less than 9 per cent when distributed profi ts are adjusted to national accounts.59 As a consequence, one main feature of Chile’s tax system is that income distribution remains in large parts unaltered before and after taxation (in average by 9 % only). The result is that taxation is a poor means for redistribution and social participation, which in sum is rather ineffi cient to mitigate inequality. Nevertheless, the student protest movements’ demand for higher taxation of seriously rich individuals to fi nance educational reform remains a contentious topic, since the public institutions of a state always need to fi nd a balance between the requirements of the economic system and the demands of its social actors. Serious tax increases could impact investment, growth, and the stability of the economy, as a vast number of examples shows. In this way, socially relevant production and redistribution versus “private appropriation”60 has become the predominant contradiction in Latin American societies, including Chile at its forefront.

58 Ibid. 59 T. Fairﬁ eld and M. Joratt: Top Income Shares, Business Proﬁ ts, and Effective Tax rates in Contemporary Chile, loc cit., p. 11. 60 H. J. Burchardt and N. Weinmann: Social Inequality and Social Policy outside the OECD, loc cit., pp. 18ff. 120 R. Benedikter and K. Siepmann

The New “Tax Wars”: An Embodiment of Latin America’s Contradiction

This contradiction, and at its center the issue of taxation, has become a particularly sensitive and argued topic within Chile’s volatile public debate of recent years because it is seen by both the center-left and the center-right alliances as question of principle, and thus as an embodiment of ideology and as a crossroads for long-term development. As a consequence, the difference in views between the left and right on the issue could hardly be any sharper. While the Piñera government successfully pursued world market-oriented policies, trying to downplay domestic redistributive demands (as practised in the handling of the student protest movement) in order to keep taxation low and attractiveness for foreign investment high (a strategy which undoubtedly has its points), Michelle Bachelet turned redistribution policy into an explicit political reform topic right at the beginning of her second term in March 2014. In this sense, Bachelet has sometimes been branded as the antithesis of Piñera, and admittedly both politicians embody stereotypes of typically Chilean center-left and center-right politics. While Bachelet, a former pediatrician, defi nes equality as her main political objective without in most cases being specifi c about what exactly that means, what it costs, and who has to pay for it, Sebastián Piñera, the businessman with one of the greatest fortunes of the country, prioritizes growth and freedom to redistribution and equality.61 Both approaches have their pros and cons. Bachelet’s 2014 plans to increase the overall tax burden by about 3 % points—to reach around 23 % of the GDP (OECD average: 25 %)62 —were suffi cient to infl ame a new “ideological war” between Chile’s left and right. As The Wall Street Journal reported in May 2014, the conservative-neoliberal opposition (the Alianza ) described the center- leftist government’s tax agenda, including the envisaged pace of reform, as

driving a steamroller through Congress.63 Senator Jaime Quintana, spokesmen of Bachelet’s governing New Majority coalition, allegedly replied that the center-left government doesn’t plan to use a “steamroller,” but

a high-powered steam shovel because it is necessary to destroy the antiquated foundations of the neo-liberal model stemming from the dictatorship.64

61 A. Luengo: Las simbologías detrás del cambio de mando en Chile. In: BBC Mundo, March 11, 2014, http://www.bbc.co.uk/mundo/noticias/2014/03/140311_chile_gobierno_traspaso_luengo. shtml . 62 The Economist: Reform in Chile. The Lady’s for turning. Is Michelle Bachelet putting her country’s growth model at risk? May 24, 2014, http://www.economist.com/ news/americas/21602681- michelle-bachelet-putting-her-countrys-growth-model-risk-ladys-turning?zid=309&ah=80dcf288 b8561b012f603b9fd9577f0e. 63 The Wall Street Journal: Assault on the Chilean Miracle. President Bachelet wants to raise the corporate tax to 35% from 20%, March 14, 2014, http://online.wsj.com/news/articles/SB1000142 4052702303678404579535830371293094 . 64 Ibid. 5 The Social Dimension: Inequality and Redistributive Policies… 121

Not only the Wall Street Journal understood Bachelet’s tax reform plans as an “assault on the Chilean miracle,” but also The Economist criticized the public discourse of Bachelet’s allies and the president’s attempts to change some fundamen- tals of the successful Chilean model:

Talk of that sort [steamroller] has set alarm bells ringing among business types. For a quarter of a century, the neoliberal model has served Chile’s economy rather well. Chile has grown by around 5% a year since the late 1980s. The poverty rate has dropped sharply, foreign investment has poured in, inﬂ ation is under control and Chile’s sovereign-wealth funds are ﬂ ush. If the system works, why overhaul it?65

A Unique System: Frozen Taxes for Foreign Investors

While there seems to be some objective truth in this observation, the reality on the ground appears to be a little bit more complex, in particular to the average Chilean citizen. Even though Chile is losing some points in competitiveness in Latin America’s growing “resource extraction” sector—for example, in face of the new attractiveness of Argentina and Peru regarding their geological material—the Andean state still has one point where the country remains outstanding in the region: tax policy concerning mining.66

In fact, if a foreigner had to choose where to start an enterprise among all the countries specialized in the extractive industry the candidate should opt for Chile, since there she or he would pay the lowest overall taxes and generate the largest proﬁ ts.67 Not limited to the extractive sector, most other Chilean industries too beneﬁ t from the general system of attracting foreign capital through low taxes, thus decisively contributing to making Chile “the best evaluated economy of the region by foreign investors.”68 Fact is Chile’s system to attract international capital is unique. Since the 1970s, the transfer of capital to Chile is regulated by law decree 600 (decreto ley 600 , or DL -600 ) overseen by Chile’s Committee on Foreign Investment (Comité de Inversiones Extranjeras 69 ). This is a voluntary mechanism created by the Chilean government for foreign investors who want to deposit capital, physical assets, or other forms of investment in Chile. Foreign investors can apply for a contract with the government. The contract consists of an agreement between the Chilean State

65 The Economist: Reform in Chile. The Lady’s for turning, loc cit. 66 G. Orellana: Chile es el país más atractivo en impuestos mineros de la región. In: El Mercurio. Economía y Negocios Online, January 28, 2008, http://www.economiaynegocios.cl/noticias/noticias.asp?id=41010 . 67 M. Ramos: Los enormes beneﬁ cios tributarios a los que acceden las empresas mineras en Chile, loc cit. Translation from Spanish by the authors. 68 http://www.inversionextranjera.cl/ . 69 Ibid. 122 R. Benedikter and K. Siepmann and the foreign investor, in which the Chilean authorities assure foreign investors “tax invariability”:

By this, Chile sends a clear signal towards foreign companies. Taxes, which normally depend on the political will of the various governments [and therefore change frequently, note by the authors], remain encased in a strait-jacket and thus are not longer considered as a ‘risk’ by the investor. 70 It is exactly at this point that the national discussion about tax reform in Chile becomes an international issue, since the current interrelatedness between economic spaces and systems ensures that modiﬁ cations in Chile affect all other com- petitors for global investment too.

A Model for the Region?

Since its implementation during the Pinochet dictatorship in 1974, most foreign investors used the DL-600 mechanism. According to estimates, they generated US$ 82 billion in the framework of the DL-600 up to 2011, which represents 56.5 % of gross income in Chile.71 No wonder that the model emanates some of its underlying convictions and ideology into the surrounding region. A striking example was the election of Peruvian president Ollanta Humala on July 28, 2011. Humala relates positively to Latin American leftist governments and left-wing politics in general, the so-called marea rosa (pink tide) or vuelta hacia la izquierda (turn to the left), an ambiguous political trend on the continent since the 2000s. As the Santiago-based investigative journalism Institute CIPERChile (Centro de Investigación e Información Periodística de Chile) reported, only one day after the announcement of the election results the Peruvian stock market was destabilized:

(And) what was the immediate request of mining companies, the international community and Peruvian entrepreneurs to tranquilize the markets? That the new president had to promise that he wouldn’t change ‘the rules of the game’. Pedro Martínez, President of the Peruvian National Society of Mining, afﬁ rmed:‘The most important aspect for us is that contracts are respected, and that the necessary consensus is created to maintain the competitiveness of the country’.72 That in substance meant that ironically the leftist government of Peru tended to similar policies, just less formalized and transparent, to those put into ofﬁ cial law a long time ago by Chile.

70 M. Ramos: Los enormes beneﬁ cios tributarios a los que acceden las empresas mineras en Chile, loc cit. 71 Comité de Inversiones Extranjeras: DL-600, http://www.ciechile.gob.cl/es/dl-600/ . 72 M. Ramos: Los enormes beneﬁ cios tributarios a los que acceden las empresas mineras en Chile, loc cit. Translation from Spanish by the authors. 5 The Social Dimension: Inequality and Redistributive Policies… 123

But given that the whole of Latin America is in the rapid (and sometimes all too quick and thus partly chaotic) process from underdevelopment to development and from poverty to (relative) wealth, its increasingly educated and informed populations fi nd it diffi cult to not seek their share in privileges, profi ts, and tax exemptions, as best proven by the rise of social protests and political confl icts linked to the extractive industry in the last few years.

Outlook. Bachelet’s Reform Task: A Twofold Balancing Act Between National and Individual Demands—And Between Domestic and Foreign Requests

What is the outlook? When Chile’s tax system was created during Pinochet’s regime, it was without doubt one of the most internationally advanced, the perfect expression of neoliberalism at its global forefront and a clever strategic move for a country then in a stage of underdevelopment. Nowadays, though, it has become a “contested feature” within an economy that has meritedly entered the club of the developed nations, the OECD. As a former member of Chile’s Committee on Foreign Investment stated in an interview with CIPERChile:

In the 1980s and 1990s investing in Chile was like putting money into Rwanda, you had to be crazy. […] The fi rst mining companies came to Chile after signing a security contract with the MIGA [Multilateral Investment Guarantee Agency], an agency of the World Bank that provides guarantees to countries in ‘economic risk’: countries in risk of civil war, expropriation or restrictions to the transfer of money. […] When I entered the Committee on Foreign Investment in 1990, the big issue of all foreign companies willing to invest in Chile was the purchase of securities against political and social risk. Everybody went to the MIGA before investing in Chile. 73 Today, the overall panorama has sharply changed. In the framework of today’s internationally highly competitive, export driven and effi cient Chilean economy domestically shaken by popular protest and a widespread feeling of malestár (unease), Bachelet’s reform task has become a twofold balancing act between national and individual demands—and between domestic and foreign requests. In a fi rst attempt to master this complex challenge, Bachelet’s 2014 proposals for tax reform not only included a raise of the corporate tax rate from 20 to 25 % (or 35 %, as was speculated in some sources), but also to end the DL-600 for new investment projects and the liquidation of the Taxable Profi t Fund,74 which de facto enabled owners to avoid the payment of personal income taxes. These would be serious structural changes that would probably impact growth and foreign investment at

73 Ibid. 74 E. Thomson: Pinochet-Era Lure at Risk in Chile Election: Taxes. In: Bloomberg News, October 16, 2013, http://www.bloomberg.com/news/2013-10-16/pinochet-era-investment-lure-at-risk-in- chile-election-taxes.html . 124 R. Benedikter and K. Siepmann least in the short-term perspective. Further, in face of the slowing Chilean economy of the fi rst months of 2014 some analysts considered Bachelet’s “pace of change” as “reckless”75 and feared a new wave of polarization between the left and right, similar to the polarized situation in 1973. Considered together, present Chile features comparatively high redistributive potentials in terms of wealth and profi ts together with relatively high barriers to changes in redistribution, i.e., institutional and legal regulations that fi x the status quo. Thus, the tax system, in essence still stemming from the heritage of the Pinochet dictatorship, seems to have proven to be in itself a “resilient” mechanism, not least because of its undisputed national and international success, fostering economic growth while perpetuating (perceived and factual) domestic inequality due to its restricted ability to generate appropriate sources of revenue to public institutions for redistribution. The challenge ahead will be the search for a new balance between domestic and foreign demands making taxation a tool for social change among others , i.e., a tool not too important, but at the same time not too meaningless, while upholding Chile’s attractiveness within the international economic and fi nancial system and continuing the country’s path of overall growth. While this task is not much different from that of other countries in need of reform, it remains in its very nature a particularly delicate and diffi cult one. Summing up, the task ahead of the government Bachelet II could be concentrated in three questions: – First, how can Chile further evolve as a “national community” according to the United Nations Development Programme’s (UNPD’s) global motto: “Empowered lives—resilient nations,”76 i.e., by serving both the interests of its individual citizens and the national good? – Second , how can both these dimensions be reconciled—i.e., how can we manage to not privilege one of them disproportionally over the other? – Third, how can a domestic bi-partisan political consensus about the reforms needed in the redistributional system be forged, conscious not least of the fact that any solution will be considered as a model for proper development in the surrounding geopolitical area increasingly interrelated with Chile? To answer these three crucial questions by concrete measures while keeping the country together in its basic civil convictions and simultaneously fi nding sound and wise compromises with the opposition will be a tough challenge for president Bachelet, as it would be for any government in charge, independent of its ideological affi liation. Without doubt, there will be no easy and fast solutions with the potential to last. To fi nd such solutions in a sober and encompassing dialogue between all sides and all sectors of current Chilean society will take time. On the other hand, the respective process will be watched by the international community with great attention because of its exemplary character, putting Chile

75 The Economist: Reform in Chile. The Lady’s for turning, loc cit. 76 United Nations Development Programme: One Planet to Share. Asia-Paciﬁ c Human Development Report, Routledge India 2012, http://www10.iadb.org/intal/intalcdi/PE/2012/10241.pdf . 5 The Social Dimension: Inequality and Redistributive Policies… 125 once again at the center of global curiosity and interest, and thus further increasing the value and importance of the potential national solutions found. The importance of Chile’s envisaged reforms as a case for participatory and democratic reforms in economically successful, but domestically uneasy countries is underscored by the fact that emerging (and sometimes disputed) international reform thinkers such as Thomas Piketty explicitly want to travel to Chile to study its envisaged tax reform in order to gain valuable teachings about the future of equality versus inequality. 77 That suggests that Chile will serve as a role model for improving social justice on a relatively high developmental level for other areas throughout the coming years.

77 Nación.cl: Piketty está interesado en viajar a Chile para conocer la riforma tributaria. In: La Nación, May 06, 2014, http://www.lanacion.cl/noticias/economia/ocde/piketty-esta-interesado- en-viajar-a-chile-para-conocer-la-reforma-tributaria/2014-05-06/193249.html . Chapter 6 The Fiscal Dimension: Greater Fairness at the Price of a Slowing Economy? The Ideological Debate Behind Bachelet’s Envisaged Tax Reform

Roland Benedikter , Katja Siepmann , and Miguel Zlosilo

Similar to her eight competing candidates in the presidential elections of November–December 2013, winner Michelle Bachelet ran with a program promising substantial reforms and innovations. Since the beginning of her new legislature, Bachelet, who is the ﬁ rst person to return to the Chilean presidential palace for a second term since General Carlos Ibañez in 1952,1 tried to keep her promises, announcing new initiatives almost every day. In her annual state-of-the-nation address on May 21, 2014 she declared:

The speed with which we’re working reﬂ ects our conviction that keeping your promises is one of the best ways of enhancing the view that the public has of politics. 2 Bachelet up to May 2014 made 102 reform and innovation announcements3 addressing most topics of the developmental debate, simultaneously reafﬁ rming that she wanted to give priority to the three reforms which were formulated in her electoral program of November 2013 aimed at starting a “new cycle” for the country. These are

1 The Economist: Michelle Bachelet’s inauguration: Return of the queen, March 11, 2014, http:// www.economist.com/blogs/americasview/2014/03/michelle-bachelets-inauguration . 2 The Economist: Reform in Chile. The Lady’s for turning. Is Michelle Bachelet putting her country’s growth model at risk?, loc cit. 3 GFK Adimark Chile: Evaluación Gobierno, Mayo 2014, general summary, http://www.adimark. cl/es/estudios/index.asp?id=230 . R. Benedikter (*) University of California , Santa Barbara , CA , USA e-mail: [email protected] K. Siepmann • M. Zlosilo Opina Market Research Institute , Santiago , Chile e-mail: [email protected]; [email protected]

1. A reform of the educational system intended mainly to face Chile’s problem of inequality through equal access to qualifi cation and upward mobility. 2. A reform of the tax system to improve social justice, in substantial parts intended also to fi nance the reform of education. 3. A reform of the constitution in order to get to a more contemporary functioning of the institutions.4 With her fi rst state-of-the-nation address back in offi ce Bachelet apparently at least met the goal of (temporarily) improving the Chilean public’s view of politics as the president’s approval rates of pre- and post-“May 21” showed. The impact of her speech was refl ected by an increase of 4 % approval points (May 7–20, 2014: 53 %; May 22–30: 57 %),5 which critics said rather demonstrated the favorable climate for reforms than particular enthusiasm for the president. Nevertheless, the evaluations of feasibility of each of the three envisaged reforms differed signifi - cantly in the support ratings in May 2014 and indicated that all three will probably remain long- term challenges:

The constitutional reform appears to be the most supported measure with 71%. Nonetheless, only 37% believe that the government will be able to carry out the reform. Something similar happens with the educational reform, which has a support of 58% and an expectation of feasibility of 44%. This means that the support of these two measures is signifi cantly larger than the expectation of proper realization. The case of the tax reform is different: here we have a public support of 51% and an estimated feasibility of 53%. Furthermore, there are signifi cant differences of support for each of the three measures by the different socio- economic classes.6 Of the three, Bachelet’s envisaged tax reform is the measurement causing major polarization and contention. In fact, the support ratings of the tax and educational reforms show open differences in interest in changing the status quo. While 29 % of the lower class in May 2014 rejected Bachelet’s intended tax reform, 41 % of the middle class did so, and 46 % of the upper class. 7 Similar fi gures are found for the educational reform: 26 % of the lower class rejects the reform plans, 38 % of the middle class, and 45 % of the upper class.8 In addition, these polls were carried out in a moment of economic slowdown in Chile. Since mid-2013 the growth rate shrunk gradually from over 5 % to an unexpected low point of 1.4 % in January 2014,9 which was followed by a similarly low rate of around 2 %10 in the succeeding months. In the face of this context and the

4 Ibid., general summary. 5 Ibid., p. 16. 6 Ibid., general summary. Translation from Spanish by the authors. 7 Ibid., p. 38. 8 Ibid., p. 39. 9 Cooperativa.cl: Actividad económica de enero fue las más baja en cuatro años, March 5, 2014, http://www.cooperativa.cl/noticias/economia/crecimiento/actividad-economica-de-enero-fue-la- mas-baja-en-cuatro-anos/2014-03-05/083937.html . 10 Emol Economía: Imacec (indicator of economic activity) 2012-2014, http://www.emol.com/economia/indicadores/imacec.asp . 6 The Fiscal Dimension: Greater Fairness at the Price… 129 ongoing skeptical growth expectations for Chile’s economy, Bachelet’s approval rates remained relatively high.11 With a rate of 56 % for the month of May 2014, the president raised two points in comparison with the data of March 2014 12 and was even more favorably perceived than in the same period of her fi rst mandate (May 2006: 55 %). 13 The combination of these factors constitutes the overall framework for Bachelet’s envisaged three main reforms, which are seen as crucial for the success of her second mandate by her voters. Among them, the tax reform is particularly important since it is the prerequisite for fi nancing the educational reform (and other related measures), as its explicit main goal is the generation of the funds needed for broader access to education. In order to understand the problem-clusters, options, and perspectives inherent in this historical constellation, we need to discuss the following topics: – First, we have to view the economic situation of Chile within the global economic and political context of 2014 taking into account the experience of Peruvian President Ollanta Humala and the destabilization of the stock markets after his election in 2011. What are the reasons for the economic slowdown of South America’s “jaguar”? Is it in some way connected with the return to power of the left? – Second, we elucidate some details of the planned tax reform. What are its possible effects on the different socioeconomic classes and on the main economic and social actors: individuals, owners, and companies? – Third , we have to take a look at how Bachelet’s envisaged reforms are intertwined with the functioning of the Chilean national economy as a whole. Is the tax reform becoming a potential (i.e., real or perceived, practical or psychological) threat for the country’s economy, as, for example, international intellectuals and media propagate? And will the elite from the center-right thus legitimately block the envisaged changes by seizing the diffi cult moment of the national economy as a counter argument?

An “Inherited” Economic Slowdown?

When at the beginning of March 2014, only a few days before the introduction of the government Bachelet II, the falling numbers of economic growth of January were published by the Central Bank of Chile, a heated debate started between the leftist and rightist coalitions, and their incoming and outgoing governmental representatives. Bachelet’s designated Minister of Finance, Alberto Arenas, stated:

The new government inherits from [Sebastián Piñera’s center-right] administration the legacy of a slowing economy and low rates of growth, as the ﬁ gures indicate. […] The rate of growth in January 2014 (1.4%) conﬁ rms the diagnosis we have made during the whole

11 GFK Adimark Chile: Evaluación Gobierno, Mayo 2014, general summary. 12 Ibid., p. 11. 13 Ibid., general summary. 130 R. Benedikter et al.

electoral campaign in 2013 […] We have said it in that campaign and we are telling it with seriousness to our citizens once again: We have the experience and we will govern from March 11, 2014 onwards to recover the lost time in productivity, innovation and energy [of the era Piñera 2010–2014].14 The same day Piñera’s Minister of the Interior and director of the next re-election campaign of the former president, “Project Piñera 2018,” Andrés Chadwick, negated responsibility of the outgoing government for the country’s slowdown, pointing instead to a psychological breakdown of the economy due to the imminent takeover of the left:

[We] should not only view the photography of the latest moment when the situation refers to economic expectations, which fundamentally move in relation to what comes and not to what has occurred in the past. […] I recommend watching the whole movie of the last four years instead of viewing the photography of today. […] There was an economic growth of 5.4% on average over the past 4 years under adverse international conditions and with a gigantic earthquake in the country. Chile’s growth was one of the biggest and most solid among all South American countries and worldwide, and we created almost a million of jobs in four years. […] Therefore, are we handing over a country with problems to the leftist alliance? No, it is the opposite: The benchmark is very high for the new government, and as it is the rule in the world of politics, if the bars are high, those who have to grow up to them will do everything to lower them.15 The next day, Piñera’s outgoing Minister of Finance, Felipe Larraín, also entered the discussion appealing for no conclusions to be drawn solely based on the mood of the day. In his view, the economic slowdown was inﬂ uenced by unemployment in the shipping sector, the decrease of exports, and the particularly high level of economic growth in January of the previous year (2013).16 Larraín commented on the performance of the outgoing government:

We had to face much greater difﬁ culties; and so with regard to the new government we have to say, it is much better to take care of an economy in deceleration than of one in recession. […] This government [Piñera’s government] inherited an economy in recession, and as everybody knows we had to cope with that and with an earthquake. We did not look out for excuses, we never do that, we were never talking about the inherited recession and the earthquake. We were searching for forward solutions to let the country grow, and this is exactly what we expect from the new authorities.17

14 Diario Financiero de Chile: Arenas critica la gestión económica de Piñera y advierte “herencia” de un crecimiento bajo, March 5, 2014, http://www.df.cl/arenas-el-nuevo-gobierno-recibe-la-herencia-de-una-economia-desacelerada/prontus_df/2014-03-05/105416.html . Translation from Spanish by the authors. 15 Cooperativa.cl: Chadwick ante Imacec de enero: Hay que mirar la película completa, March 5, 2014, http://www.cooperativa.cl/noticias/economia/crecimiento/chadwick-ante-imacec-de-enero- hay-que-mirar-la-pelicula-completa/2014-03-05/090744.html . Translation from Spanish by the authors. 16 J. P. Palacios: Ministro Larraín: “Es mucho mejor hacerse cargo de una economía en desaceler- ación que de una recesión”. In: La Tercera, March 6, 2014, http://www.latercera.com/noticia/ negocios/2014/03/655-568259-9-ministro-larrain-es-mucho-mejor-hacerse-cargo-de-una-economia-en-desaceleracion.shtml . 17 Ibid. Translation from Spanish by the authors. 6 The Fiscal Dimension: Greater Fairness at the Price… 131

This scenario of mutual reproaches between the (just starting) center-left and the (outgoing) center-right governments, combined with the defense of economic success claimed by both sides against the other, marked a shift towards an ideological rather than an economic debate about the reasons for Chile’s deceleration. Instead of turning the debate into a rational or even technical discussion about the objective causes of stagnation, political tension was created by both sides. After some weeks of contention including both positive and negative projections of the impact of the envisaged tax reform of Bachelet II, the new Minister of Finance, Alberto Arenas, even called upon his predecessor Larraín

to change his pocket calculator, because his numbers have little to do with reality.18 Without doubt, both sides had—and have—some arguments underpinned by information provided by party experts and think tanks of leftist or rightist inclination. But in order to shed a more pondered light on Chile’s most recent economic and fi scal trajectory, we have to take a closer look at the respective offi cial data provided by the fi scal and monetary authorities of the nation.

Chile’s Central Bank: The 2013–2014 Indicators and the Deterioration of Expectations in Three Subsequent Quarterly Reports

The Central Bank of Chile (Banco Central de Chile, or BCCh ) publishes its Monetary Policy Report (Informe de Política Monetaria , or IPoM ) four times a year. The report collects the principal factors inﬂ uencing Chile’s economy, including

the international environment, general ﬁ nancial conditions, the outlook for aggregate demand, production and employment, and price and cost development. 19 According to the Central Bank’s statistics, the GDP of Chile grew 5.4 % in 2012 and 4.1 % in 2013, albeit with an accentuated slowdown in the second half of the year.20 Since then, in each report the institution adjusted its predictions for growth downwards: between 3.75 and 4.75 % 21 in December 2013, between 3 and 4 %22 in March 2014, between 2.5 and 3.5 % in June 2014.23

18 Economía y Negocios: Ministro Arenas: Felipe Larraín “debe cambiar la calculadora para sacar sus estimaciones”, May 5, 2014, http://www.economiaynegocios.cl/noticias/noticias. asp?id=119418 . Translation from Spanish by the authors. 19 Central Bank of Chile: Monetary Policy Report, March 2014, p. 5, http://www.bcentral.cl/eng/ publications/policies/pdf/mpr032014.pdf . 20 Central Bank of Chile: Monetary Policy Report, June 2014, p. 4, http://www.bcentral.cl/eng/ publications/policies/pdf/mpr062014.pdf . 21 Central Bank of Chile: Monetary Policy Report, March 2014, loc cit., p. 8. 22 Ibid., p. 8. 23 Central Bank of Chile: Monetary Policy Report, June 2014, loc cit., p. 4. 132 R. Benedikter et al.

What is the Central Bank’s explanation? In March 2014, the authority stated:

In the past few months, production and demand grew less than foreseen. The difference was particularly palpable in the investment-related sectors. Annual infl ation has somewhat exceeded the forecast […], largely driven by increases in energy prices that respond to both higher external prices and the depreciation of the Chilean peso [i.e., the national currency, author’s note] … Internationally, the main change is the signifi cant decline of the copper price, which has deteriorated the terms of trade relevant to Chile. Neither global economic growth nor the external fi nancial conditions show any signifi cant changes over the recent months. However, there have been some episodes of fi nancial volatility in overseas markets and an overall depreciation of the currencies of emerging countries. The Chilean peso has depreciated substantially, even outpacing the average for emerging economies. 24 The depreciation of the peso is due to multiple factors. Among them is, on the international level, the imminent end of the “easy money policy,” i.e., the “policy of printing money” or “quantitative easing” (QE)25 as announced by former U.S. Federal Reserve Chief Ben Bernanke in December 2013,26 confi rmed by the appointment of new Federal Reserve Chief Janet Yellen on January 6, 201427 and the subsequent programmatic statements of the Fed.28 The announcement of the end of the US easy money policy and in part (though insecure and instable) the recovery of the Eurozone have led to a trend away from investments in bonds and currencies of emerging countries back to Western currencies and economies which promise increasing interest rates and stabilizing fi nancial systems. This leads to a “natural” downturn of emerging countries’ currencies and foreign direct investments, including those of Chile.29 Despite the fact that OECD member Chile is strictly speaking not an “emerging country” anymore, the issue shows: – First , the nation is still not fully integrated into Western mainstream development – Second, its increasing dependency on global strategic decisions that will force the country to pursue meta-party strategies in its foreign policy more intensely— an insight that had already started in the era of Sebastián Piñera and induced his extended trips to Europe and the USA.

24 Central Bank of Chile: Monetary Policy Report, March 2014, loc cit., pp. 7-10. 25 A. Oprita: Emerging markets currencies to depreciate further. In: Emerging Markets: News, Analysis and Opinion, June 17, 2013, http://www.emergingmarkets.org/Article/3219501/ Emerging-market-currencies-to-depreciate-further.html . 26 R. Garver: Bernanke’s Finale: Beginning of the End of the Easy Money Era. In: The Fiscal Times, December 18, 2013, http://www.thefi scaltimes.com/Articles/2013/12/18/Bernankes-Finale- Beginning-End-Easy-Money-Era . 27 Ylan Q. Mui: Janet Yellen confi rmed as Federal Reserve chairman. In: The Washington Post, January 6, 2014, http://www.washingtonpost.com/business/economy/janet-yellen-confi rmed-as- next-fed-chief/2014/01/06/14b38582-76f2-11e3-8963-b4b654bcc9b2_story.html . 28 A. Moon: Wall Street rises after Fed minutes on ‚easy money’ exit. In: Reuters, July 9, 2014, http://www.reuters.com/article/2014/07/09/us-markets-stocks-idUSKBN0FD14H20140709 . 29 The Economist: Emerging Markets: Don’t Panic, February 1, 2014, http://www.economist.com/ news/leaders/21595454-there-no-reason-broad-emerging-market-crisis-nervous-investors-could- yet-cause#sthash.2n4OV8A8.dpbs . 6 The Fiscal Dimension: Greater Fairness at the Price… 133

The overall picture of the Chilean economy in which the debate about the tax reform is embedded in essence suggests that, irrespective of other aspects, both the center-left and the center-right are right at least to a certain extent. Chile’s (slight) economic downturn of the past few years is both due to international developments and thus cannot be inﬂ uenced by a small and in some ways still marginalized country (as the center-right points out); and it is also an effect of the difﬁ culties, and in some cases shortfalls, of the national governments in anticipating at least some major trajectories of the trends that were inevitable sooner or later (as the center-left underscores).30 But there are (as it is obvious with regard to macro-developments) more aspects which need to be taken into account:

Behind the lower-than-expected investment growth are several factors. […] There was the maturation of the mining investment cycle […] Another factor is the worsening of expectations as reﬂ ected in the Business Conﬁ dence Survey and in our Business Perception Report. […] The revisions to the Chilean growth outlook are in line with those of most emerging economies. The baseline scenario assumes that in 2014 this group of countries will under- perform its average growth of recent years. One example is China, whose expansion forecast is even below the target of 7.5% expressed by its authorities. Other Latin American economies such as Brazil, Mexico and Peru have also made downward revisions to their projections. 31 Although it is similarly contested whether China can be still considered an emerging country because the Middle Kingdom in the view of both its own and international opinion-makers and strategists has already substantially “moved to the end of its industrialization phase,”32 there is some plausibility in pointing out the substantial interweaving between Chile, China, Europe, and the USA, which will decisively impact the Andean nation in the years ahead:

All this contrasts with the developed world where growth estimates […] have been revised upward, albeit with some […] nuances. It is worth singling out the better performance of the United States and the clear signs of recovery in the Eurozone. Taking into account all these developments plus their relative importance, the forecast for Chile’s trading partners growth [can be] raised marginally for 2014 and 2015, on average, to a 3.8% […] Nevertheless, in comparison with previous years, external conditions will be less favorable: on the one hand, because international interest rates have risen, as has risk aversion regarding emerging markets. On the other hand, because the copper price has [featured] a signiﬁ - cant decrease over [2014]. In fact, the price of the metal was below US$3 per pound […] The baseline scenario estimates prices of US$3 in 2014 and US$2.85 in 2015. […] Abroad, one [primordial] risk has to do with the behavior of emerging economies, especially China. [This] risk has […] recently been exacerbated because of growing doubts posed by the fragility of the Chinese ﬁ nancial system and the overall increase in the risk perception of the emerging world. In particular, a deterioration in the Chinese economy would have

30 P. Mishra: Emerging markets should brace up for the end of QE to mute the spillover effects. In: The Economic Times of India, July 15, 2013, http://articles.economictimes. indiatimes.com/2013- 07-15/news/40590546_1_stock-markets-advanced-economies-emerging-markets. 31 Central Bank of Chile: Monetary Policy Report, March 2014, loc cit., pp. 7-10. 32 J. Anderlini: Out of Proportion. China struggles to diversify out of manufacturing. In: Financial Times, June 10, 2013, p. 9. 134 R. Benedikter et al.

fi rst-order effects on Chile and the group of emerging economies [exporting raw materials and resources to China, author’s note], spreading through both real and fi nancial channels. Of particular importance [would be] its impact on the price of commodities, including copper, as well as on the growth of other important trading partners such as Latin American countries. Moreover, it cannot be ruled out that the vulnerabilities that some emerging economies have accumulated may generate new episodes of volatility.33 As Juan Carlos Gachúz of Benemérita Puebla University analyzed as early as 2012,34 the strong dependency of resource-exporting countries such as Chile on the globalized economy is turning into a double-edged sword that needs to be closely monitored if the nation doesn’t want to fall into the “resource trap”35 despite all advancement. With close relations simultaneously to China and the USA, Chile risks being caught between the geopolitical Skylla and Charybdis of the two G-2 Pacifi c superpowers, which despite all agreements and diplomatic efforts have started strong competition to secure infl uence zones and global resources.36 As an effect, the process of growing economic interdependency between Chile and China has already reached a level of saturation worrying many in the Western hemisphere. Furthermore, the Central Bank of Chile reported in June 2014 that although the “volatility of global fi nancial markets has [overall] declined,”37 the “performance of Chilean domestic spending remains weak.”38 In mid-2014, the nation faced a “sharper-than-expected slowdown in private consumption”39 which is probably linked to the growing social divide and rich–poor gap, including the threat of a further decline of the middle class due to rising prices and stagnant wages—mirrored by the annual variation of the Chilean Consumer Price Index (Índice de Precios al Consumidor ) that went from 1.5 % in October 2013 to 5.7 % in May 2014.40 Even though the Central Bank of Chile has been reducing interest rates since October 2013 to their (in some cases) decade-long minimums, a new wave of foreign and domestic investment failed to appear. Moreover, contrary to previous experiences the continuous expansion of bank loans has also declined in the fi rst half of 2014— with an insecure outlook.41 In many ways, the “neoliberal” system adapted to Chile has, overall, led to a domestic economic situation that seems to be saturated with loans at both the micro- and meso-dimensions at a level where further margins may be minimal, and with a

33 Central Bank of Chile: Monetary Policy Report, March 2014, loc cit., pp. 7-10. 34 J. C. Gachúz: Chile’s Economic and Political Relationship with China, loc cit. 35 Heinrich Böll Foundation Berlin: Resource extraction and the future of democracy in Latin America, loc cit. 36 R. Benedikter and V. Nowotny: China’s Road Ahead. Problems, Questions, Perspectives, Springer New York 2014, http://link.springer.com/book/10.1007 %2 F978-1-4614-9363-1 . 37 Central Bank of Chile: Monetary Policy Report, June 2014, loc cit., p. 3. 38 Ibid. 39 Ibid. 40 Ibid. 41 Central Bank of Chile: Monetary Policy Report, June 2014, loc cit., p. 4. 6 The Fiscal Dimension: Greater Fairness at the Price… 135 middle class partly in ﬁ nancial trouble. In such a structure, the economy has to rely over-proportionally on exterior factors, and when these enter in crisis, the system gets into turbulences.

Chile’s Economic Perspective: An Equation with More than one Variable Unknown

In accordance with explanations of the impact of present and imminent global factors given by the World Bank, Chile’s most inﬂ uential investigative center on public opinion Centro de Estudios Públicos (CEP) highlighted in March 2014 that opposing forces will affect Chile and other Latin American countries. On the one hand, there could be a modest dynamism with a weaker-than-expected performance in the USA, Japan, and China and a faster-than-expected recovery of the Eurozone42 ; on the other hand, emerging countries could be affected by the gradual reduction of the purchasing programs of government bonds by the US-Central Bank (Fed), the inﬂ u- ence of China’s slowdown on the international price development of primary goods and commodities, and the respective structural adjustments in the most vulnerable countries:

As a result of these developments, the bond interests of the developed countries have decreased … , the prices of metals have fallen and the currencies of the emerging countries have deteriorated.43 Commenting on the domestic factors of deceleration, CEP pointed out that in addition to the reasons mentioned by the World Bank

We have to add the incertitude associated with the change of [the Chilean] government [from Piñera to Bachelet II, author’s note] and the ﬁ nal content of the envisaged reforms of the new government. 44 That implies that in relation to the economic, political, and strategic framework in which Bachelet’s envisaged three reform clusters will have to take place, it can be observed that there are exogenous components (i.e., less favorable international market conditions for emerging countries) that considerably impact the projection of growth, as well as endogenous components (e.g., the envisaged reforms whose content is strongly contended) that likewise impact predictions insofar as they function as concrete sociopsychological factors even before their actual implementation.

42 V. Corbo: El momento económico internacional y nacional: Marzo 2014. In: Centro de Estudios Públicos (CEP): Puntos de Referencia, No. 366, Marzo 2014, p.1, http://www.cepchile.cl/Puntos- de-Referencia_CEP_PDF/pder366_vcorbo.pdf . 43 Ibid. Translation from Spanish by the authors. 44 Ibid. 136 R. Benedikter et al.

As a result, the questions to consider of where Chile is heading are 1. To what extent the slowdown of Chile’s economy can be explained by the changed international context. 2. To what extent by the impact of domestic inequality that stands at a critical level. 3. To what extent by the public discussion of the potentially upcoming reforms. In addition, we need to consider the impact of new policies on the energy sector and the “pro-growth”-agenda with increased public spending promised by the government Bachelet II, both of which are intended to mitigate the impact of the measures envisaged in the tax reform. Consistent with such complexity, Bachelet I’s former minister of ﬁ nance ( Ministro de Hacienda, 2006–2010) and independent presidential pre-candidate in the elections of 2013, Andrés Velasco—who like many other Chilean politicians holds academic degrees up to the postdoctoral level from renowned US-American universities (Harvard, Yale, and Columbia) in Economics, International Relations and Philosophy—commented in May 2014 on the prospects of success of Bachelet II’s envisaged reforms:

To me it does not seem plausible that someone with seriousness and without making a face could say: ‘This or that [reform] will come at the cost of x percentage’. Not necessarily because this cost is absent, but because of a more simple reason: this reform [the envisaged tax reform] will be changing many things—for better or for worse; in some cases certainly for better, in others I have my doubts. Therefore, the projections including points, commas and decimals border on impudence […] One could estimate with a certain degree of certainty how much money would enter into the Chilean treasury in conjunction with the tax reform, but the prediction of its concrete effects on growth, savings and employment is a different dimension.45 Velasco made these claims because the tax reform, while potentially ﬂ ushing cash into Chile’s coffers, could at the same time negatively affect growth, foreign investment, consumption, and entrepreneurial motivation. And so all three envisaged reform clusters have their pros and cons which can be assessed only post fac- tum, i.e., after their implementation and a sufﬁ cient phase of incubation, as always in phases of political, economic, and social transition where reforms always (and necessarily) bear both chances and risks.

Fears Nurtured by Incertitude

Considered together, Velasco’s diagnosis and the assumptions of the CEP, which is, as we should remember, a conservative strategy center that is ﬁ nanced by Chile’s entrepreneurial class—i.e., the potentially most strongly affected group of the ﬁ scal

45 Cooperativa.cl: Andrés Velasco: La reforma tributaria puede tocar el bolsillo de la clase media, May 5, 2014, 2014, http://www.cooperativa.cl/noticias/economia/impuestos/andres-velasco-la- reforma-tributaria-puede-tocar-el-bolsillo-de-la-clase-media/2014-05-05/131316.html . Translation from Spanish by the authors. 6 The Fiscal Dimension: Greater Fairness at the Price… 137 proposals of the government Bachelet II—conﬁ rm that the projection of growth is an equation with more than one variable unknown. In particular, it is not clear how much inﬂ uence the recent squabbling of Chilean politicians and experts spreading incertitude on the markets due to a potential “change of fundamental rules” has had and will have. Even before Bachelet’s victory in the 2013 presidential elections, Forbes Magazine in October 2013 was warning about Chile’s “new socialist agenda” and was asking if this would be the historical “end” of the proverbial Chilean economic “miracle”:

This November [2013], Chile will face what could prove to be the most important presidential and parliamentary election since the one which brought democracy back to the country in 1990. For the ﬁ rst time in more than two decades, the Chilean people will choose between two opposing economic and social projects. On the one hand, the center right candidate Evelyn Matthei promises to continue Chile along the successful economic path of the last decades. And on the other hand, former president Michelle Bachelet’s new socialist platform promises to make radical changes to the current Chilean economic system. The political parties of the [leftist] coalition that governed Chile from 1990 to 2010, the Communist party, and other minor left-wing groups merged into Bachelet’s coalition called ‘Nueva Mayoría’. The Communist party has historically been a destabilizing factor in Chilean politics and has been absent from government since 1973. Fully embedded in the logic of the Cold War, it still considers Fidel Castro’s Cuba the ideal political and economic system. Despite its anti-democratic features and its limited number of supporters, Chilean communists have managed to become increasingly inﬂ uential in national politics through the massive student movement that brought President Piñera’s government to its knees in 2011 and 2012. Along with a systematic campaign against the free market economic model by leading progressive intellectuals, the leftist student movement—whose most emblematic leader is a member of the Communist Party—has contributed to an ideological radicalization of the classical left-wing political parties, including the Christian Democrats. As a result of the radicalization, Bachelet’s political platform breaks away from the previous consensus among all major political parties on the need to preserve an economic model based on free market institutions. Questioning this economic consensus hasn’t happened since the return of democracy in 1990. 46 This analysis is without doubt strongly exaggerated and in retrospect sounds like part of an antireform campaign. Even though Axel Kaiser, the author of this commentary, is probably right in the assumption of a strong, partly radical pro-left impact of the student movement on the new political constellation in Chile of certainly not healthy implications, his observation that “Michelle Bachelet is destroying Chile’s free-market institutions”47 seems intended to fuel fear by incorrectly announcing the possible end of free-market ethics and economic liberalism. Quite the opposite, and as a continuous element of discord with the left-wing section of her own coalition and some main representatives of the student protest movement,

46 A. Kaiser: Is this the end of the Chilean economic miracle? In: Forbes Magazine, October 13, 2013, http://www.forbes.com/sites/realspin/2013/10/28/is-this-the-end-of-the-chilean-economic-miracle/ . 47 A. Kaiser: Michelle Bachelet is destroying Chile’s free market institutions. In: Forbes Magazine, August 26, 2014, http://www.forbes.com/sites/realspin/2014/08/26/michelle-bachelet-is- destroying-chiles-free-market-institutions/ . 138 R. Benedikter et al.

Bachelet seems to be much more moderate and value the beneﬁ ts of the old system that has brought great prosperity to the country, but will try to combine these with more equity and social innovation:

We’re not about to undo all the good work that’s gone before […] We’re still committed to public-private partnerships and the free market, we’re still open to foreign investment and free-trade agreements. None of that is going to change.48 Thus, in order not to overstate either the leftist or rightist ideological seedbeds unavoidably implicit in the debate that threaten to nourish the social and political tensions linked to the envisaged tax reform, we have to take a closer—and more sober—look at the objective features of the planned measures.

The Envisaged Changes in the Tax System

At the end of March 2014, Bachelet’s new minister of fi nance, Alberto Arenas, presented the main practical proposals for the tax reform. 49 According to Chilean media trust La Tercerca these are: 1 . Taxes for individuals : Gradual tax reduction from the current maximum rate of 40–35 % in 4 years, i.e., until the end of the current government (2014–2018). 2 . Taxes for companies : Gradual tax increase from the current 20–25 % in 4 years (2014–2018). 3 . Taxes on gained profi ts : Beginning in the fourth year after the approval of the reform (i.e., in 2018), taxes must be paid on gained profi ts and not only on distributed profi ts as it is the rule today. 4 . Dissolution of the Fund of Taxable Profi ts ( FUT): As soon as the changes of point 3) are implemented, the authorities plan to dissolve the Fund of Taxable Profi ts. That could be the case only after the next general elections in November 2018 and thus de facto a decision to be confi rmed by the next government. 5 . Instant tax write - off : The reform includes a mechanism that allows companies to write off the complete amount of investment expenditure of a given year. This is a measure that is interpreted as a “mechanism replacing the FUT.” 6. Introduction of saving incentives for the middle class . Among them is a tax reduction for gains on investments in “fi nancial instruments” (such as personal health care or private insurance and private pension funds) for persons living on a paycheck. 7 . Green taxes: Introduction of additional taxes on fuels for vehicles and on pollut- ant emissions in the industry.

48 The Economist: Reform in Chile. The Lady’s for turning. Is Michelle Bachelet putting her country’s growth model at risk?, loc cit. 49 A good overview over the current taxation practice, its history and the envisaged changes is provided in J. Atria: Tributación en sociedad. Impuestos y redistribución en el Chile del siglo XXI, Uqbar editores, Santiago de Chile 2014. 6 The Fiscal Dimension: Greater Fairness at the Price… 139

8 . Repeal of the DL 600: New investment projects will no longer beneﬁ t from the guarantee of “tax invariability.” It will have to be decided whether these measures will be implemented through new national laws or through the adaptation of existing ones by the means of their “new interpretation” by the National Tax Service (SII).50

Contradictory Judgements

A couple of weeks later, on April 15, 2014, the Santiago-based non-partisan market research institute Opina conducted a survey on the citizen’s opinion about the envisaged measures.51 What it found were strongly contradictory information levels and judgements among the interviewees: – 50 % of the interviewees declared that they did not know anything about the tax reform, but nevertheless – 67 % thought that it was necessary to implement it in some way. – 60 % did not know what the additionally levied taxes were destined to be spent on (i.e., for educational reform), but nevertheless. – As many thought that the additional taxes would be insufﬁ cient to achieve the planned targets of the government. – In addition, 63 % believed that the reform would not improve fairness in income distribution—i.e., that it would not achieve the explicit goal number one of the reform: greater social justice. Since the presentation of the planned measures in March 2014, the support of the reform has been essentially connected to the increase of taxes for companies, which is the best known (68 %) and most approved measure (79 %) by the public. The second best known measure (51 %) is the dissolution of the Fund of Taxable Proﬁ ts, which has an approval rate of 72 %. Interestingly, the reduction of individual income taxation (point 1) is a much lesser known issue to the public, although it could be regarded as the one that has the greatest and most immediate impact on everyday life. Overall, the totality of measures still has a low level of awareness on the individual level. The two measures: 2) taxes for companies and 4) dissolution of the FUT are the only ones that exceed a level of awareness of 50 %. There is in particular a lack of clarity about the impact of the reform on the personal situation of most

50 P. Jimena: Los nueve temas que el proyecto de reforma tributaria deberá despejar. In: La Tercera, March 30, 2014, http://www.latercera.com/noticia/negocios/2014/03/655-571841-9-los-nueve- temas-que-el-proyecto-de-reforma-tributaria-debera-despejar.shtml . 51 ADN Radio: Encuesta UNAB (Universidad Andrés Bello): Mayoría apoya reforma tributaria y opina que no disminuirá la desigualdad. UNAB-OPINA Research, April 22, 2014, http://www. adnradio.cl/noticias/economia/encuesta-unab-mayoria-apoya-reforma-tributaria-y-opina-que-no- disminuira-la-desigualdad/20140422/nota/2187608.aspx. 140 R. Benedikter et al. interviewees. 42 % declared that if the reform would impact them, they would rather not be favorable to it (a sign of subjective relative well-being combined with mistrust), and 20 % did not know or refuse to answer. 55 % of those who expect to be impacted by the reform believed that the impact will be rather negative. There is another interesting aspect. According to the interviewees, the most affected actors of the envisaged tax reform will be individuals (29 %) and big companies (28 %). Regarding the perception of the existing tax burden, 53 % think that the ratio is high for individuals and low for companies (43 %), which supports the hypothesis that a large part of popular support for the reform stems from the envisaged tax increase for companies. At the same time, there is broad consensus (76 %) that the government should consider and possibly integrate the opinion of the center-right opposition when implementing such a wide-reaching tax reform. In May 2014, the Chilean market research institute Adimark also conducted a survey on the public’s opinion about Bachelet II’s envisaged tax reform. It appears that in the weeks between the Opina and Adimark surveys, public awareness about the reform grew, but with it also the polarization among citizens. Awareness and polarization seem to be closely connected. According to the Adimark survey, Chilean citizens think that the planned tax reform

… will negatively affect the middle class: 57% yes; 38% no; … will reduce job offers: 47% yes, 47% no; … will contribute to the reduction of inequality: 46% yes, 49% no; … will negatively affect economic growth: 44% yes, 47% no.52 Such an accentuated division in opinions may have various reasons. It mainly points to the complexities of the current system and of the potential changes; and thus to the difﬁ culty in predicting the resulting effects from an individual perspective. That creates insecurity and skepticism. Without doubt, the most disputed topic of the envisaged reform has been the dissolution of the Fund of Taxable Proﬁ ts —a highly complex mechanism that is defended with an iron will by its advocates and not necessarily fully understood by some of its critics.

The Disputed “Fetish” of the Tax Reform Discussion: The “Fund of Taxable Proﬁ ts”

As was said—half humorously, half serious—in intellectual circles in Santiago de Chile in May 2014, the Fund of Taxable Proﬁ ts (or FUT) has turned into the “fetish” of the tax reform controversy. What is so “sexy” about Chile’s tax register, and why does it stimulate particularly headed debates? There are several reasons for the importance of this issue.

52 GFK Adimark Chile: Evaluación Gobierno, Mayo 2014, loc cit., p. 43. 6 The Fiscal Dimension: Greater Fairness at the Price… 141

First, the Fund of Taxable Profi ts is the fundament of Chile’s “integrated” tax system that worked so well for the national economy over many years. Theoretically, it is a book that registers all the inputs and outputs of companies and determines balances that become the base of corporate and personal taxation. In practice though, it is a highly complex mechanism transparent to few. Even the Chilean Tax Service itself got confused and has changed its attitude towards the register several times.53 In a simplifi ed way, the basic mechanism of the FUT could be described as follows: 1. Companies have to pay a “tax of fi rst category” (Impuesto de primera categoría ) on gained profi ts into the FUT, which is currently 20 %. This money in the fi rst instance does not enter the treasury, but remains as a provisional number in the register. 54 2. The tax of “fi rst category” is a provisional payment or rather a credit for the tax of “second category” that is the personal tax of owners (Impuesto Global Complementario ), which is currently imposed at a maximum rate of 40 %.55 3. The personal tax is only paid on distributed profi ts, not on gained ones. This means that if a company does not distribute its gained profi ts to individuals in a given year and thus “postpones” taxation, no tax money will enter the treasury. There is no limitation of postponement.56 If this is the basic, simplifi ed mechanism, it’s still hard to understand how the system works in practice. So, let us walk through an example to get some more clarity. As Chile’s new director of Tax Service, Michel Jorratt, found in his in-depth study on the Chilean tax system,57 Chile’s companies on average only distribute one third of their gained profi ts. In order to keep numbers simple let us assume that a company makes US$1,000 profi t and distributes US$300 (i.e., approximately one third) to individuals. Thus, US$200 (i.e., 20 % of US$1,000) is entered as a number into the FUT as corporate tax. In the next step, the owner of the company has to pay an individual tax on distributed profi ts (Impuesto Global Complementario), i.e., on US$300, which comes with a maximum rate of 40 %. That makes US$120 individual tax (i.e., 40 % of 300$). However, the owner does not pay the US$120 out of his own pocket, but the money is detracted from the provisional payment on the corporate tax ( Impuesto de primera categoría) that is already inside the FUT, i.e.,

53 Cidmartí: Servicio Contable para Pymes: Que es el FUT? (Countable Service for Small- and Medium-Sized Enterprises: What is the Fund of Taxable Profi ts?), http://www.cidmarti.cl/fut.htm . 54 Ibid. 55 Ibid. 56 Ibid. 57 T. Fairfi eld and M. Jorratt: Top Income Shares, Business Profi ts, and Effective Tax rates in Contemporary Chile. In: International Center for Tax and Development, January 2014, p. 7, http:// www.ictd.ac/en/publications/top-income-shares-business-profits-and-effective-tax-rates- contemporary-chile . 142 R. Benedikter et al.

Fig. 6.1 The basic mechanism of the “Fund of Taxable Profi ts” (FUT) from the US$200.58 In such a way, US$120 is detracted from US$200. Finally, a positive balance in the FUT (i.e., the US$80 remaining) represents profi ts that have not been distributed and which are waiting to be taxed with the distributed profi ts (Impuesto Global Complementario ) when the distribution occurs.59 Thus, in the end there is factually only the payment of one tax. As Michel Jorratt explains and Fig. 6.1 tries to sum up, in reality the personal tax on distributed profi ts is the only tax ever paid (Michel Jorratt), since this is the tax actually entering the treasury. The branding of the overall process is not of much importance; the essential idea is that these two taxes are paid from the same origin. This mechanism generates a—highly complex and poorly transparent—reality which Ciperchile explains as follows:

In this system sui generis the companies in reality do not pay any tribute of their gained proﬁ ts to the state. The origin of this mechanism is based on the ﬁ scal regulation of 1984, which assumes that companies and owners are the same person . This means for example that the Bank of Chile and its owners, including minority shareholders, possess the same identity in the eyes of the tax authorities; and this is the case for all enterprises in Chile.

58 S. Fernández Figueroa: Por qué debe eliminarse el FUT. In: Ciperchile, July 19, 2013, http:// ciperchile.cl/2013/07/19/por-que-debe-eliminarse-el-fut/ . 59 Cidmartí: Servicio Contable para Pymes: Que es el FUT?, loc cit. 6 The Fiscal Dimension: Greater Fairness at the Price… 143

For this reason—to avoid double taxation—only the owners, not the companies have in practice to pay taxes. Such vision seems to be unique in the world. Many basic, intermediate and advanced administrative legislative texts in other parts of the world draw attention to the differentiation between companies and owners. In fact, the Chilean legislation, and Chilean laws in general, recognize this differentiation too, except for this unique case. 60

Is the FUT the Factual Basis of the “Chilean Miracle”?

It is a natural consequence that despite fully recognizing and appreciating the success in economic progress seemingly decisively co-created by the FUT over decades, some questions can be posed—and increasingly are posed indeed by Chilean intellectuals and reformers, independent of their political or party afﬁ liation. While the tax burden on individuals for average Chilean citizens is formally comparatively high, reaching up to 40 %—and thus much higher than taxation in the USA, almost reaching European standards— the FUT seems to factually be a tax exemption for Chile’s entrepreneurial class, i.e., for those who own companies or are shareholders. Over the last 30 years (since 1984), owners of companies in Chile in essence did not pay income tax out of their own pocket as the rest of Chileans do.61 Since its inception the FUT has cost the state around $50 billion in tax revenue, as president Bachelet estimated at the start of her second mandate.62 At the same time, the defenders of Chile’s “integrated” tax system embodied by the FUT have pointed out—correctly—that the FUT has been a key component in the country’s unprecedented path of growth through investment. In 2004, the current President of Chile’s Central Bank, Harvard-educated economist Rodrigo Vergara Montes, published a paper on the ﬁ ndings of the empirical investigation on the link between taxation and private investment in Chile:

[With regard to] the relationship between the corporate income tax … and the performance of private investments […], macroeconomic and microeconomic evidence is found to be consistent with the hypothesis of the reduction in the corporate income tax as being one of the determinants of the investment boom [in Chile]. […] Along with several structural reforms Chile embarked in a major income tax reform in the 1980s. The corporate income tax was signiﬁ cantly reduced from 50% at the beginning of the decade to 10% in the second half of the 1980s and even to 0% for a single year in 1989 [the last year of Pinochet’s dictatorship, author’s note]. In 1990 the corporate income tax was raised to 15% and recently to 17% [today 20%, author’s note]. Since the mid 1980s until the late 1990s the macroeconomic performance of Chile was impressive by almost any standard. GDP growth averaged 7.6% between 1985 and 1997 while unemployment and inﬂ ation went down in a scenario of overall macroeconomic stability. Private investment showed an impressive performance

60 S. Fernández Figueroa: Por qué debe eliminarse el FUT, loc cit. Translation from Spanish by the authors. 61 Ibid. 62 The Economist: Reform in Chile. The Lady’s for turning. Is Michelle Bachelet putting her country’s growth model at risk?, loc cit. 144 R. Benedikter et al.

Fig. 6.2 Interrelation between taxation and private investment 1980–2002 (Rodrigo Vergara Montes)

climbing from 12% of GDP in 1984-86 to 22.5% of GDP in 1995-97 … Macroeconomic evidence for the period 1975-2003 in Chile indicates that the tax [law] explains an increase in private investment …63 The crucial link between the economic success of Chile in the past decades and the FUT mechanism is exempliﬁ ed by the core diagram of Rodrigo Vergara’s study of 2004 64 which underscores the interrelation between taxation and investment (Fig. 6.2 ):

The Crucial Question: How to Foster Convergence Between the Social Agenda of the Left and the Economic Expertise of the right in a Climate of Cooperation Instead of Ideological Arguments?

Only if we take into account both dimensions: 1. Of how decisively the FUT has helped the Chilean economy (and society) to grow.

63 R. Vergara Montes: Taxation and Private Investment: Evidence for Chile. In: Instituto de Economía, Pontiﬁ cia Universidad Católica de Chile (PUC), PUC Economics Institute Working Paper No. 268, June 2004, http://www.economia.puc.cl/en-WP?docid=2512 , pp. 14-15. 64 R. Vergara Montes: Taxation and Private Investment: Evidence for Chile, loc cit., p. 21. 6 The Fiscal Dimension: Greater Fairness at the Price… 145

2. How exceptional its tax exemptions for those who own at the expense of those who depend on a monthly paycheck appear in international comparison, can we fully grasp the complexity and diffi culty of the envisaged reforms of Chile’s current fi scal system. And all this is embedded in a diffi cult overall economic environment at the international level. The question is not whether the center-left is correct with its requests for better social equity; neither is it if the center-right has done an exceptional job in inventing a system that has proven to be a magnet for investment and growth. From a “neutral” viewpoint, both sides are right and have their legitimate views and stand- points. The question then is, whether both views can, at least to a realistic extent, be integrated. That will not be possible in the framework of a new ideological battle that often tends to move beyond the practical questions on the ground and ends up in useless arguments about abstract principles, but rather in the framework of a dialogical climate of innovation. Without doubt, it will be impossible to fully integrate both sides; but it should at least be attempted with goodwill by everybody involved— as the majority of Chile’s citizens (76 %) wisely request.65

Tax Reform: A Double-Edged Sword that Raises Rhetorical Show Fights—And Tends to Simpliﬁ cations

The result of complexity and polarization is that tax reform will be—however, it is carried out—a double-edged sword. The elimination of the FUT may realistically signify a loss of attractiveness of Chile’s investment sector, while potentially mitigating inequality. Overall, the change of this mechanism will probably have a much greater impact on future taxation than the envisaged rise of the corporate tax from 20 to 25 %. If Rodrigo Vergara is right, Chile’s success of the past decades was based to a good extent on the low tax rates on companies and the tax exemptions for business owners, i.e., the FUT. So what will happen with Chile’s investment-led economy if the government Bachelet II implements its envisaged measures, including the abolition of the FUT? Is there a sustainable way to combine tax rises and greater fairness with economic growth in current Chile? And thus, is the tax reform a chance to solve the classical contradiction of private appropriation and social reproduction of inequality in Latin America? Not surprisingly, on this point the discourses of politicians and experts from the center-left and center-right differ sharply. As might be expected, Bachelet’s authorities received a series of criticism, petitions, and requests for change by parliamentarians after the announcement of the tax reform proposals. In April 2014, the Minister of Finance, Alberto Arenas, assured

65 ADN Radio: Encuesta UNAB (Universidad Andrés Bello): Mayoría apoya reforma tributaria y opina que no disminuirá la desigualdad. UNAB-OPINA Research, loc cit. 146 R. Benedikter et al. that the government would be open for dialogue and willing to realize changes in line with the principles and basic objectives of the reform. In an interview with newspaper, La Segunda he stated:

We are open to proposals to reﬁ ne the legislative project, as long as the changes are in the framework of collecting 3 points of the GDP in taxes and effectively contribute to the improvement of a progressive system, that means a system which enhances income redistribution. 66 In April 2014, Arenas defended the idea that

Returning to the path of growth in Chile is totally compatible with tax increase. I believe there were many myths. […] Today’s tax system stems from 30 years ago in comparison with other OECD countries [of which many have modernized their tax system, authors note] possessing the same per capita income as Chile. And until now I have not seen any debate on this procedure which confi rms that we are right and that there is still space to increase the tax burden [given that comparable OECD countries have on average higher taxes, author’s note].67 For Arenas, the criticism of the planned tax reform was no surprise since the target is nothing less then the collection of 3.02 points of the GDP, a signifi cant increase compared to previous governments. Such a magnitude naturally provokes contention among both the infl uenced and the infl uential social actors. According to Arenas, “technical” suggestions are welcome to the government of Bachelet II, but not ideological rhetoric:

There are some elucidations on the laws of the markets which we are following and which relate to a technical debate: very welcome they are! And there are others with a language of terror which will not receive any eco by the government. 68 In Arenas’ view, the principal critics of reform are not those with low income, but

Those with statements that there will be problems on the ﬁ nancial markets, problems with some investors or that something could happen with economic growth. Those people do not talk based on the numbers since they do not accompany their words with them. […] All ﬁ gures of the developed countries (OECD) demonstrate that progress in growth is compatible with a higher tax burden. 69 More objectively, though, such comparisons with other OECD countries could be problematic due to the numerous peculiarities of the Chilean system. For example, other OECD countries didn’t base their growth and wealth system on

66 El Mostrador: Ministro Arenas se muestra disponible a analizar cambios en la reforma tributaria: Vivienda, diésel y alcoholes, April 17, 2014, http://www.elmostrador.cl/pais/2014/04/17/ministro- arenas-se-muestra-disponible-a-analizar-cambios-en-la-reforma-tributaria-vivienda-diesel-y- alcoholes/ . Translation from Spanish by the authors. 67 Emol: Arenas: “Los de más bajos ingresos no son los que están hoy criticando la reforma tributaria”, April 6, 2014, http://www.emol.com/noticias/economia/2014/04/06/653835/arenas-los-de- mas-bajos-ingresos-no-son-los-que-estan-hoy-criticando-la-reforma-tributaria.html . Translation from Spanish by the authors. 68 Ibid. 69 Ibid. 6 The Fiscal Dimension: Greater Fairness at the Price… 147 mechanisms like the FUT, and thus can’t be compared with a potential future Chile that has abolished it. Probably cognizant of that, the director of the Chilean Central Bank, Rodrigo Vergara, refused to give an anticipative analysis on the potential or expected effects of the reform:

The tax reform has many elements which we are currently getting to know. Therefore it is diffi cult to make an overall evaluation of its effects at this moment.70 Even though Vargas also said that it is not the business of the Central Bank to evaluate the “microeconomics” of the topic, but that it should rather concentrate on the possible macroeconomic effects on Chile’s fi scal policy, he pointed out that the government’s tax reform was a proposal to fi nance “permanent outcomes through permanent incomes,”71 and that this could be positive and in accordance with a sustainable long-term fi scal policy. Vargas thus implicitly criticized today’s indefi nite postponement of tax payments trough the FUT. In reference to the macroeconomic effects, in particular to the development of infl ation, he stated that the Central Bank expects the effect to be “transitory and once only.”72 Thus, the discourse of the Chilean Central Bank tends to value the technical vision as well as the long-term perspective demanded by academics, investment banks, and international organizations. It estimates a medium to minor impact of the reform on Chile’s market economy in a long-term perspective.

Legitimate Doubts

Nonetheless, the conservative Centro de Estudios Públicos (CEP) manifested legitimate doubts about the practical impact of the reform on the country’s GINI- coefﬁ cient, which directly afﬁ rms the necessity of reform. It thus questioned the effectiveness of the measures to reach Bachelet’s principal reform goal, the reduction of inequality. The CEP did so with some good arguments:

In the past 30 years Chile has been one of the most successful countries in the improvement of living conditions of its citizens. Inequality has been reduced too, although the rate remains very high. The ﬁ ght against this problem has been transformed into a political goal with an emphasis that probably didn’t exist before. Nevertheless, the intensity of the discourse suggesting profound changes in short periods of time [on the basis of the tax reform, author’s note] is surprising. In fact, the envisaged tax reform is presented as a bombshell for the reduction of inequality. However, the indicators commonly used to compare the OECD

70 Emol: Vergara por Reforma Tributaria: Alza de impuestos tendría efectos transitorios y “de una vez” en IPC, April 2, 2014, http://www.emol.com/noticias/economia/2014/04/02/653230/vergara- por-reforma-tributaria-alza-de-impuestos-tendria-efectos-transitorios-y-de-una-vez-en-ipc.html . Translation from Spanish by the authors. 71 Ibid. 72 Ibid. 148 R. Benedikter et al.

countries [Chile since the 2000s has the highest index of inequality of all OECD countries, author’s note] will not be affected by changes [in taxation] in a short-term period. This is because the index with which we compare Chile to the average OECD is the GINI [inequality] coeffi cient after taxes and transfer payments [i.e., the redistribution of income by the government, for example welfare, social security and governmental subsidies, author’s note]. The main part of the GINI index is in most OECD countries [infl uenced] by transfer payments [for example welfare state in Europe, author’s note] and much less by the specifi c tax structure. But in Chile transfer payments will not increase with the tax reform since large parts of the collected taxes will be spent in goods and services, which will be only indirectly received by households and are therefore not considered within the GINI inequality coeffi cient. […] A potential higher tax burden, particularly if it would exclusively affect the 5% of citizens with top income, could reduce the GINI coeffi cient only by around 0.014. We should not underestimate this, but the effect is clearly limited. […] At the same time, it is diffi cult to imagine that the tax reform will have no impact on investment, growth, employment and salaries […] If we consider the most recent estimations (the moderate ones and not the extremes) the announced tax rise could reduce the GDP about 4.5%. […] The government could reduce the risk of the impact of the potential tax reform on growth, employment, and salaries if it would in some way revise the proposal of complete elimination of the FUT. 73 This—very reasoned and moderate—CEP paper was written by Harald Beyer, the new director of the institution since March 2014 74 replacing the novelist and poet Arturo Fontaine after 31 years in offi ce. Beyer, who is said to be closely linked to the Chilean “Chicago Boys” 75 whose ideology we discussed in Chap. 1 , was Minister of Education during the Piñera administration until he had to renounce his offi ce because of the accusation of not controlling exaggerated profi t generation in the educational sector.76 Although Beyer was barred from exercising public offi ce for fi ve years in April 2013,77 he was subsequently appointed director of Chile’s most infl uential institute of public opinion, ranked third of all think tanks in Latin America.78 As an explanation for the turnover in the CEP directorship, Fontaine declared that the institution asked him to resign the post in order to initiate “a

73 H. Beyer: Sobre impuestos, desigualdad y reforma tributaria. In: Centro de Estudios Públicos: Puntos de Referencia, No. 368, Abril 2014, http://www.cepchile.cl/Puntos-de-Referencia_CEP_ PDF/pder368_HBeyer.pdf . Translation from Spanish by the authors. 74 A. Muñoz: Harald Beyer será el nuevo director del CEP desde marzo de 2014. In: La Tercera, June 7, 2013, http://www.latercera.com/noticia/politica/2013/06/674-527137-9-harald-beyer-sera- el-nuevo-director-del-cep-desde-marzo-de-2014.shtml . 75 Forbes: Free-Market Think Tanks in the Americas: Their debt to the “Chicago Boys”, April 4, 2014, http://www.forbes.com/sites/alejandrochafuen/2014/04/04/free-market-think-tanks-in-the- americas-their-debt-to-the-chicago-boys/ . 76 O. Miranda y N. Vila: Harald Beyer al banquillo: Diputados ingresan acusación constitucional. In: Radio UChile, March 19, 2013, http://radio.uchile.cl/2013/03/19/diputados-opositores- conﬁ rman-acusacion-constitucional-contra-harald-beyer . 77 La Tercera: Senado destituye a Harald Beyer tás aprobar la acusación constitucional, April 17, 2013, http://www.latercera.com/noticia/politica/2013/04/674-519156-9-senado-destituye-a- harald-beyer-tras-aprobar-la-acusacion-constitucional-por-20.shtml . 78 J. G. McGann (ed.): 2013 Global Go To Think Tank Index Report. International Relations Program, University of Pennsylvania, Think Tanks and Civil Society Program, January 22, 2014, http://www.gotothinktank.com/dev1/wp-content/uploads/2014/01/GoToReport2013.pdf . 6 The Fiscal Dimension: Greater Fairness at the Price… 149 new era.”79 Many external experts, though, believed that his dismissal was linked to his too-close relationship with the leftist student protest movement. Carlos Peña, rector of the Universidad Diego Portales and columnist of the newspaper El Mercurio , presented a more differentiated view and commented:

Is there a political meaning in the dismissal of Arturo Fontaine as director of the CEP? Certainly … To understand this it is unavoidable to take a glance on the origin of the CEP and its self-assigned role: being a center of the center-right in order to infl uence public culture in Chile. […] The Centro de Estudios Públicos was born in the 1980s, and its principal object always has been the achievement of hegemony of the model that motivated the dictatorship [i.e., the neoliberal model, author’s note] in the intellectual world. […] But pretending (as it was said in the newspapers these days) that the CEP was a neutral and an independent project and that Arturo Fontaine left the institution because of his opposition on the issue of profi t-making or his inclinations to the left is simply a stupidity. Nothing of this has occurred. So, why was he dismissed? The reason is an inconsistency that sooner or later had to become public. Arturo Fontaine is a creative writer for whom it was very diffi - cult to be—what Gramsci called—an ‘organic’ intellectual: someone whose task is the creation of coherence of a handful of [class] interests. The ‘organic’ intellectuals live from the interests they are promoting; a writer lives from his ideas and his spirit. Fontaine eventually opted for the latter …80 Apparently, the unpredictability of the free-fl oating mindset of a liberal writer such as Fontaine was not appropriate in a moment of increasing polarization in Chile, and the CEP therefore renewed itself with a technically well-informed and committed authority.

The Discussion Among Chile’s Former Leaders

In April 2014, Eduardo Aninat, former Minister of Finance in the government of Eduardo Frei (1994–2000) and former subsecretary of the International Monetary Fund (IMF), took the following position on the discussion on tax reform in Chile and its crucial role for the future of the country:

Until now there was only a dialogue between the deaf. The new Minister of Finance is a wall which opens some small windows, but there is no effective dialogue. On the other hand I observe a chaotic yelling by the critics. Therefore, between a closed wall and chaotic protesting we will not constructively progress the nation. […] I would prefer a fundamental discussion, in the morning, at midday and in the evening with clear rules set by the president. Why did the government call for expert meetings on so many other topics, and didn’t about this crucial issue?81

79 A. Muñoz: Harald Beyer será el nuevo director del CEP desde marzo de 2014, loc cit. 80 C. Peña: El CEP y Fontaine. In: El Mercurio blogs, May 19, 2013, http://www.elmercurio.com/ blogs/2013/05/19/11852/El-CEP-y-Fontaine.aspx . Translation from Spanish by the authors. 81 Economía Terra Chile: Aninat por Reforma Tributaria: “¿Que hierba están fumando?”, April 27, 2014, http://economia.terra.cl/aninat-por-reforma-tributaria-que-hierba-estan-fumando,66d085af 604a5410VgnVCM3000009af154d0RCRD.html . Translation from Spanish by the authors. 150 R. Benedikter et al.

Regarding the most controversial reform issue—the elimination of the FUT— and its potential effects on investment, the experienced politician stated, immediately abandoning the moderate tone he so eloquently requested from others:

The elimination of the FUT to zero—even gradually over three [or four] years—under these speciﬁ c circumstances, when Latin America tends to be in a recession, when commodities tend to not be as fashionable, is a complicated move, at least an imprudent one. It would be better to be corrected. […] Will there be an effect [on private investment, author’s note]? Yes, because the argument of the government can’t be based on a scenario of immutable investment, growth and accompanying immutable circumstances. What kind of grass are they smoking? Despite having very good economists in their ranks, they suddenly seem to ignore that [investment] is a dynamic variable over time, always characterized by risks.82 The president of the inﬂ uential Santiago-based think tank Corporación de Estudios para Latinoamérica (CIEPLAN) and former Minister of Finance in the government of Patricio Aylwin (1990–1994), Alejandro Foxley, in contrast broadly supported the elimination of the FUT. He stated that the tax reform would be

An effort we have to master as a nation […] Many people have noted very late that the FUT has been a signiﬁ cant source of evasion. Considering this in the speciﬁ c context of the country, where people think that there are ‘misuses’ [‘abusos ’] by some sectors, I believe that the task of the government is to eliminate the FUT. 83 Former Minister of Finance Andrés Velasco, on the other hand, welcomed the permanency of the FUT, since its elimination would exhibit “risks” and could ultimately negatively affect the middle class, even though he also mentioned that it is impossible to fully anticipate the effects of so serious tax reform on investment and employment:

The effect could have an incubation phase of one, two, or three years, and there will be so many things changing […] There is no doubt about who will be the ones paying more in the immediate and literal sense […]: the majority of taxes will be paid by companies and by persons who are allocated in the highest income stratum. […] A quite different topic is the possible long-term effect on savings. The tax reform could lead to a threefold decrease of investment, growth, and job creation, and thus ultimately of savings. In this case, the whole country would pay the bill, and certainly the middle class.84 As we can sum up the debate between former ministers, there is no unanimous opinion regarding the impact of the envisaged reform on the principle economic indicators in the short, middle, and long-term perspective. Aninat is the most critical,

82 Ibid. Translation from Spanish by the authors. 83 Emol: Foxley propone que reforma incentive compra de viviendas para la clase media, May 17, 2014, http://www.emol.com/noticias/economia/2014/05/17/660659/alejandro-foxley-propone- que-reforma-tributaria-apunte-a-aumentar-el-ahorro-de-la-clase-media.html. Translation from Spanish by the authors. 84 Cooperativa Chile: Andrés Velasco: La reforma tributaria puede tocar el bolsillo de la clase media, May 5, 2014, http://www.cooperativa.cl/noticias/economia/impuestos/andres-velasco-la- reforma-tributaria-puede-tocar-el-bolsillo-de-la-clase-media/2014-05-05/131316.html . Translation from Spanish by the authors. 6 The Fiscal Dimension: Greater Fairness at the Price… 151 focusing on the negative effects on investment and growth, while Velasco rejects precise projections of the results due to the enormous complexity of the issue, and of change in general. Foxley, on the other hand, values the initiative, putting emphasis on the ethical justiﬁ cation of reform, i.e., the ﬁ ght against inequality and malpractice.

The Road Ahead: The Need for Rational Discussion Based on Objective Data

What Is the Perspective?

Taking an overview of the debate on tax reform, the economist and former Principal Regional Adviser of the United Nations Economic Commission for Latin America and the Caribbean (UNELAC/CEPAL), Ricardo Ffrench-Davis, like Animat, diagnosed:

We are right in the middle of a discussion among the deaf. Some argue that the reform could affect primarily the small and medium-sized companies. Others claim exactly the opposite. There are opposite poles of the debate [on every detail]. 85 But more important than simply criticizing the ideological traits of the debate, Ffrench-Davis highlighted the degree of “disinformation” of international observers and the public in the discussion:

For example, the columnist of the Wall Street Journal is saying that corporate tax will rise to 35%. Editorials of two morning papers say that taxes in general would rise to 35%. Former minister Valesco assures the same. However, there is no tax increase to 35% for companies foreseen.86 Although the author referred to international media, the conclusion is the same as that of the national Opina survey: disinformation and lack of clear empirical data is still noticeable in all sectors of the population, as well as in the political movements and the parties. Ffrench-Davis’s most pointed message, though, will be crucial for the further path of the envisaged reform, be it realized or not:

With the tax reform, the richest will get a country that lives in peace.87

85 El Mostrador: Ffrench-Davis: “Con la reforma tributaria los más ricos van a estar recibiendo un país que vive en paz”, May 12, 2014, http://www.elmostrador.cl/pais/2014/05/12/ffrench-davis- con-la-reforma-tributaria-los-mas-ricos-van-a-estar-recibiendo-un-pais-que-vive-en-paz/ . Translation from Spanish by the authors. 86 Ibid. 87 El Mostrador: Ffrench-Davis: “Con la reforma tributaria los más ricos van a estar recibiendo un país que vive en paz”, loc cit. 152 R. Benedikter et al.

There can be no doubt that this could—and probably should—be the main message of peace and reconciliation of the envisaged reform: In the end, everybody, including the richest who may be forced to pay more, will benefi t from it. That message could turn out to be valid in principle not only for Chile, but for the greater Latin American context when it comes to the discussion on reform; and Chile could serve as laboratory of experiment and example for such a reconciliatory trajectory. What is needed most to enterprise a prudent and balanced path in this direction now is a rational discussion based on objective data, which are still meager or not available at all to the discussants. But there are two positive points even in this dissatisfactory situation. The fi rst is that there are more modern centers of research in present-day Chile than ever before with the ability to provide these data: among them are (to mention only some academic ones) the Instituto de Investigación en Sciencias Sociales (Institute for the Research in the Social Sciences) of the University Diego Portales (UDP),88 the Centro de Políticas Públicas of the Pontifi cia Universidad Católica89 or the Facultad de Gobierno of the Universidad del Desarrollo. 90 And there are more institutions in the making. The second positive point is that such centers in Chile have been becoming internationalized during the past few years, thus starting actively to provide not only national, but internationally comparative data. The Chilean politicians—both those in charge and those in opposition—will be well advised to make use of this expertise and try to foster the production of more and more reliable mid- to long- term anticipations based on estimations of empirical value, possibly including international experts exemplarily interested in the specifi c Chilean tax reform experiment.

A Sudden Consensus Between Center-Left and Center-Right?

After 99 presentations regarding the planned tax reform by different actors in the Financial Committee of the Upper House of the Chilean parliament, Minister of Finance Alberto Arenas declared on July 9, 2014 that the government and the opposition had achieved a “historical agreement” based on a protocol between a handful of senators: Ricardo Lagos (PPD: Partido por la Democracia ), Carlos Montes (PS: Partido Socialista), and Andrés Zaldívar (DC: Partido Demócrata Christiano ) from the governing leftist Nueva Mayoría ; and Juan Antonio Coloma (UDI: Unión Democrata Independiente), and José García Ruminot (RN: Renovación Nacional ) from the conservative opposition coalition Alianza por Chile . 91

88 http://www.icso.cl/ . 89 http://politicaspublicas.uc.cl/ . 90 http://gobierno.udd.cl/ . 91 S. Radic: Gobierno y oposición reformulan proyecto de Reforma Tributaria y logran acuerdo transversal. In: El Mostrador, July 9, 2014, http://www.elmostradormercados.cl/destacados/ gobierno-y-oposicion-reformulan-proyecto-de-reforma-tributaria-y-logran-acuerdo-trasnversal/ . 6 The Fiscal Dimension: Greater Fairness at the Price… 153

The compromise consisted in collecting 3 % of the GDP (US$8,200 million) in taxes and in the simultaneous appointment of a multipartisan technical expert team to elaborate the precise text of the respective law. The main point and most disputed novelty of the original proposal by the government—the shift of the base of taxation from “distributed” income to “attributed” income (renta atribuida)—should now be no longer obligatory, but optional. In this sense, the senators from both sides of the aisle settled on a compromise: the possibility for taxpayers to choose between two systems, an “integrated” one and a “partially integrated” one:

The fi rst option to adhere would be an integrated system with attributed income taxes of 25% in the fi rst category [taxes for companies, author’s note] and the application of taxes in the second category [personal taxes, author’s note] with ‘impuestos global complementario’ of rates of 0% to 35%. The second option is a partially integrated taxation with 27% for companies from January 1, 2017 onwards […] In this case there is a higher burden on dividends […] with the right of reduction of 65% as credit of the taxes of fi rst category in the moment of distribution … 92 The protocol furthermore assured that in both options the FUT would be eliminated. After the news of the potential agreement was released in July 2014, all involved actors immediately declared they had triumphed. Arenas because he had achieved the inclusion of parties belonging to the center-right opposition into a fi scal reform project originally only fostered by the center-leftist Nueva Mayoría , thus increasing the publicly perceived legitimacy of the reform and vowing to make it more resilient in the face of eventual changes in the political color of the next government. The senators of the left were proud because it was probably the fi rst profound debate on tax reform ever in the democratic Chilean parliament. And the conservative opposition senators felt like winners since their modifi cation of the fi rst draft helped generate an image of infl uence and power for the center-right. The fi ve senators from the left and the right directly involved after signing the agreement made the following declarations: 1. Senator Carlos Montes (center-left party Partido Socialista): “This is an important step to collect more resources for other important reforms like that of education. Besides collecting more, we are changing the logics of the tax system […] I appreciate the possibility of working in over 99 hearings and presentations with a president who gave all of us the same chance to contribute and a minister of fi nance who was present in all audiences.”93 2. Senator José García Ruminot (center-right party Renovación Nacional ): “This reform is pro-saving, pro-growth and pro-employment. But it is also pro-small- and medium sized enterprises, since there will be a special tax system for them […] We are sure that from now on there will be a new spirit and a new will to grow as a nation … ”94

92 Ibid. Translation from Spanish by the authors. 93 Ibid. 94 Ibid. 154 R. Benedikter et al.

3. Senator Andrés Zaldívar (center-left party Partido Demócrata Christiano ): “I want to express my gratitude to Minister Arenas who gave us broad space to propose ideas. I do not have any historical memory of an agreement on tax reform with such magnitude that is based on the unanimity of all political persuasions. The country can feel calm since the political class did all it could to achieve a broad agreement … ”95 4. Senator Ricardo Lagos (center-left Partido por la Democracia): “There was a tax reform project which needed to be supported and perfected […] There is a shared vision in some areas to make profound change in Chile […] I appreciate the parliament which helped the discussion to reach this level.”96 5. Senator Juan Antonio Coloma (center-right Unión Democrata Independiente ): “Chile needs space for comprehension. We were not supporting the original project […] I want to be honest, we do not have the votes to change the tax reform, but we have the will to improve it … ”97 Thus, the “transverse consensus” between the ﬁ ve senators and minister Arenas was celebrated as an early political milestone of the government Bachelet II, dispel- ling doubts about its capacity to generate meta-party consensus. It left the “steam shovel” of Senator Quintana 98 out of the political discussion, which was a good move of the Nueva Mayoría carrying out a reasoned dialogue with the opposition without falling short of its primary goals.

The Basic Agreement Between Left and Right on Tax Reform in the View of the Radical Left: An “Attack on Democracy”?

Shortly afterwards former student protest leader and, since 2013, independent Member of Parliament Gabriel Boric declared that any agreement between left and right on tax reform would be an “attack on democracy,” because

The government and the leftist coalition preferred to negotiate in the house of a friend in Las Condes [i.e., an upper class district of the capital Santiago, author’s note], precisely in the house of Juan Andrés Fontaine, Piñera’s former Minister of State, instead of doing it in the Parliament in public and transparent ways. 99 For Boric there was not much difference between the agreement between the senators and the widely criticized “politics of agreement” (politica de los acuerdos )

95 Ibid. 96 Ibid. 97 Ibid. 98 Cooperativa.cl: El debate abierto de la Nueva Mayoría por la retroexacavadora de Quintana, March 26, 2014, http://www.cooperativa.cl/noticias/pais/politica/nueva-mayoria/el-debate-abierto-en-la-nueva-mayoria-por-la-a-retroexcavadoraa-de-quintana/2014-03-26/080731.html . 99 N. Sepúlveda: “El acuerdo por la Reforma Tributaria es un profundo atentado a la democracia”. In: El Mostrador, July 14, 2014, http://www.elmostrador.cl/pais/2014/07/14/el-acuerdo-por-la- reforma-tributaria-es-un-profundo-atentado-a-la-democracia/ . 6 The Fiscal Dimension: Greater Fairness at the Price… 155 of the Concertación de Partidos por la Democracia, i.e., the former coalition of leftist parties that governed Chile after the transition to democracy until Piñera’s victory in 2010:

This case establishes a dangerous precedent for the upcoming work on educational reform. I ask myself: What the heck is the sense of the parliament? In other words, if this issue ends up being negotiated in the house of friends, behind the backs of those who mobilized the people for structural reforms, than the truth is that the Chilean parliament is nothing more than decoration. In fact, the parliament was nothing other then decoration in the debate on tax reform, and apart from the fact that the agreement was signed in the senate, it was elaborated in the private house of Fontaine. […] I think it is a mistake to demonize the idea of agreement, because politics in the end is the creation of agreement between people thinking in different ways. The question is rather between which actors the agreement is made. The principal characteristic of Chile’s transition to democracy was an agreement within a small elite—which is strongly intermarried [org.: endogámica ]—, and were the interests of the most powerful and rich dominate [in bipartisan ways]. The tax agreement is a repetition of that practice. […] What they presented to us as society was a signed agreement and I would like to know what the arguments have been leading up to such an agreement with which—in form and content—I disagree.100 Boric’s argumentative line evoked declarations in defense of the bipartisan pact by center-left Senator Zaldívar. In one habitual Monday mornings meeting of the Political Committee (Comité Político ) in the presidential palace, he “fought ﬁ re with petrol”101 though when he stated on July 14, 2014:

These kinds of solutions require a certain way of doing things which can not be done in front of public opinion. […] Some [people] feel more or less informed, but there are issues where not everybody can share the kitchen, where normally there is only the cook with some assistants, not everybody, not all can be there, it is impossible. 102 This statement created some nervousness particularly among the politicians adhering to the government, i.e., of the center-left, with some of them accusing the consensus-ﬁ nding procedure of a lack of “political aesthetics,”103 because neither the Communist Party (Partido Comunista ) nor the two leftist parties Movimiento Amplio Social and Partido Izquierda Christiana de Chile which are part of the governing leftist alliance Nueva Mayoría of Bachelet II were apparently informed of the negotiations and the exact content of the agreement.104 When leaving the Political Committee, parliamentarian Guillermo Teillier of the Communist Party said that the meeting manifested the problems—in form and

100 Ibid., translation by the authors. 101 M. Jiménez: Zaldívar apaga incendio con bencina y dice que ciertos acuerdos’no pueden hacerse de cara a la opinión pública’. In: El Mostrador: July 14, 2014, http://www.elmostrador.cl/ pais/2014/07/14/zaldivar-apaga-el-incendio-con-bencina-y-dice-que-ciertos-acuerdos- no-pueden-hacerse-de-cara-a-la-opinion-publica/ . 102 Ibid. Translation from Spanish by the authors. 103 M. Jiménez: El tenso cara a cara que espera a la Nueva Mayoría y La Moneda tras el acuerdo por la Reforma Tributaria. In: El Mostrador, July 14, 2014, http://www.elmostrador.cl/ pais/2014/07/14/el-tenso-cara-a-cara-que-espera-a-la-nueva-mayoria-y-la-moneda-tras-el- acuerdo-por-la-reforma-tributaria/ . 104 Ibid. 156 R. Benedikter et al.

content—of the protocol, and that La Moneda (the presidential palace) under Bachelet II had promised to improve the relationship between the government and all parties and parliamentarians.105 The same day, on July 14, 2014, the Chilean market research institute CADEM published its weekly report on public opinion indicating that the support for tax reform among citizens had risen by 12 points (from 34 to 46 %) after the agreement between senators from both the left and the right and the government.106 50 % of the interviewees believed that the proposal—after undergoing diverse modiﬁ cations— would be “good for Chile,” and 63 % now thought that those alterations were done “because the government realized that the citizens were against the original project.”107 Furthermore, the percentage of citizens who believed that the “tax reform would negatively effect the middle class” decreased from 69 to 43 %. 108 Finally, 63 % believed the agreement could become a “historical milestone,” and 40 % saw minister Arenas “empowered” by the achievement of consensus.109 Considered together, the agreement had a positive effect on the public’s support of tax reform. Only one day after the publication of the CADEM survey, the Chilean senate approved the “tax reform 2.0” with 33 of 35 votes in favor. Senator Iván Moreira of the center-right Unión Democrata Independiente abstained, and only Senator Lily Pérez of the center-right movement Amplitud voted against the project stating:

We are not generally against tax reform, but against this specifi c reform, because it is badly designed and executed […] This tax reform went from horrible to bad, and that is why we vote against it.110 Minister of Finance Arenas in turn reaffi rmed once again the “historical” achievement of “progress” and highlighted the elimination of the FUT. 111 The president of the legal instance of the Ministry of Finance, Ricardo Lagos Weber, commented on the signature of the general agreement with relief, asserting that the “most diffi cult” was allegedly done:

The most diffi cult is not writing the details of the law, this is the second most diffi cult. The most diffi cult was the fact that the Chilean center-right three months ago argued that there should be no tax increase. Today they converge [with the center-left, author’s note] with their signature and give support to president Michelle Bachelet.112

105 M. Jiménez: Zaldívar apaga incendio con bencina y dice que ciertos acuerdos’no pueden hacerse de cara a la opinión pública’, loc. cit. 106 P. Cadiz: Encuesta Cadem: Respaldo a reforma tributaria sube 12 puntos tras acuerdo entre gobierno y senadores. In: La Tercera, July 14, 2014, http://www.latercera.com/noticia/politica/ 2014/07/674-586683-9-encuesta-cadem-respaldo-a-reforma-tributaria-sube-12-puntos-tras-acuerdo-entre.shtml . 107 Ibid. 108 Ibid. 109 Ibid. 110 Cooperativa.cl: Senado aprobó en general el proyecto de reforma tributaria, July 15, 2014, http://www.cooperativa.cl/noticias/economia/impuestos/senado-aprobo-en-general-el-proyecto- de-reforma-tributaria/2014-07-15/204936.html . 111 Ibid. 112 Ibid. 6 The Fiscal Dimension: Greater Fairness at the Price… 157

Outlook: Independent of Intermediate Achievements, There Will Be a Long Way to Go

What Is the Outlook?

It is doubtful that the “most diffi cult” is already done when it comes to a core sector of public debate and social justice of modern societies such as the taxation sector. Most probably, there remains a long way to go towards a lasting, just, and integrative reform capable of gaining the full trust of a solid majority of Chilean citizens and of improving social equality while not harming the economy in the medium and long term. This task will not be completed with a basic compromise between the dominating party coalitions or the implementation of a law; and is not only specifi - cally Chilean, but has become “international” since it affects not only most contemporary societies around the globe, but also the international discussion about the future of capitalism in general. It thus will not be an issue to simply “solve,” but rather will remain a permanent issue of balance and integration to be addressed by this and any future government and parliament: not least because while Chile is increasing taxes, other nations, such as, for example, Spain, are decreasing them to stimulate the economy and ease their crisis-burdened social psychology. Regarding the specifi c Chilean constellation, three main questions will need to be considered: First , it needs to be seen if there will be a real “change of logic” of the tax system (Senator Carlos Montes), and if yes to what extent, and if such a profound “change” is needed or if modifi cations of the given logic suffi ce. This will depend on the details of the reform to be elaborated by the expert team, discussed by the parliament, implemented by the government and its institutions, and subsequently corrected according to the experiences produced on the ground. Second, the way in which the law will be enforced with, and not against, the will of the citizens will be crucial for its destiny. Third , any serious reform, be it fi scal or educational, will challenge the long-term ability of the government Bachelet II to change the traditional logic of the “politics of agreement” in order to increase transparency and to include the largest possible number of voters and representatives of all parties into the negotiations on further decisions. The more far-reaching the reforms, the broader the underlying consensus should be. That will require a lot of investment of time and effort into consensus- building processes by the government—perhaps more than even Bachelet II will be able to invest. Chapter 7 The Educational Dimension: Michelle Bachelet II’s “Master Plan” for Chile’s Future—The Reform of Education

Roland Benedikter , Katja Siepmann , and Miguel Zlosilo

On the occasion of the presidential summit in Washington, DC, at the end of June 2014, Michelle Bachelet and Barack Obama not only discussed the Trans-Pacifi c- Partnership and the future of energy supply, but also focused on the envisaged tax and educational reforms in Chile.1 The Chilean tax reform, chosen as the appropriate measure to fi nance the educational reform by the government Bachelet II, has generated the “largest doubts”2 among the US entrepreneurial class. According to Michael Hammer, the US Ambassador to Chile (since March 20143 ), US companies have invested an estimated US$25 billion in Chile in recent decades and would thus need in the fi rst instance “clear rules” and “stability,” as he stated in May 2014.4 That means that the planned reforms in the Chilean tax system are seen rather skep- tically, since they change basic rules and are thus seen as a threat by some investors. Ambassador Hammer has since moderated his words and has regained good relations. Nevertheless, the scepticism of international investors remains.

1 F. Vargas: Bachelet en EE.UU: Conozca todos los detalles de la visita de la Presidenta a Barack Obama. In: Emol, June 28, 2014, http://www.emol.com/noticias/nacional/2014/06/28/667436/ bachelet-en-eeuu-conozca-todos-los-detalles-de-la-visita-de-la-presidenta-a-barack-obama.html . 2 Ibid. 3 Michael Hammer, US ambassador in Chile since March 2014: http://chile.usembassy.gov/ham- merbio_eng.html . 4 S. Anderson: US Ambassador Hammer: Bad case of ‘foot in mouth’ disease? In: The Santiago Times, May 13, 2014, http://santiagotimes.cl/us-ambassador-hammer-bad-case-foot-mouth- disease/ . R. Benedikter (*) University of California , Santa Barbara , CA , USA e-mail: [email protected] K. Siepmann • M. Zlosilo Opina Market Research Institute , Santiago , Chile e-mail: [email protected]; [email protected]

Intertwined Reforms: Taxation and Education

As an effect, the envisaged changes in the Chilean educational system are also of particular interest to the USA. This is on the one hand due to the strong intertwinement of both tax and educational reforms and the cross ﬁ nancing of the respective measures; on the other hand because Chile’s educational sector has constituted the greatest threat to “stability” in the Andean state in recent years, giving birth to sustained mass protests originating from the leftist student protest movement. Many consider Chile’s students as today’s most dynamic social actors of the nation, and in particular as the main driving force for potential transformation of the economic model in play, independent of how the political aspirations of the students may be judged. Without doubt, for many Chilean students the need for structural “change” comes ﬁ r s t , followed only long after by “stability.” Interestingly, Chile and the USA were simultaneously hit by strong and internationally perceived social protest movements in 2011: Chile’s student protest movement and the US “Occupy Wall Street” (OWS) and “99 %” movements (which initially were one and the same). They all grew out of grassroots-protests initiated mainly by students and led by students, intellectuals, and representatives of the educational system. As an effect, during their Washington 2014 meeting Obama and Bachelet explicitly stated that they wanted to exchange their respective experiences regarding the history, the political dimension, and the goals of student lead protest movements in the USA and Chile; compare their mechanisms; and deduct ideas to create better institutional tools for young people to improve peaceful political participation. In addition, Obama and Bachelet vowed to start a collaborative effort between the USA and Chile to further education in both countries by exchanging best practice models in order to learn from each other’s strengths and weaknesses.5 Three questions were—and for the coming years will remain—of particular interest in this regard: First , what can be learned from the analysis of Chile’s current educational system and the plans of educational reform under the government Bachelet I (2006– 2010), the government Piñera (2010–2014), and the government Bachelet II (2014–2018)? Since educational reform is a permanent topic since the 2000s in Chile, it could be assumed that there is a particular rich pool of ideas and approaches to the topic that could inspire other areas too. Second , are there intertwinements between Chile and the USA with regard to protest movements stemming from the educational system? Third, can Chile’s envisaged educational reforms become a role model for the region or even parts of the international community, and if yes, to what extent?

5 CNN Chile: Presidenta Bachelet se reunió con Barack Obama en Washington, June 30, 2014. Available on YouTube at: https://www.youtube.com/watch?v=qsVT7hCuXtQ . 7 The Educational Dimension: Michelle Bachelet II’s… 161

Burning Student Debt Obligations: A Metaphor for the Problems of the Chilean Educational System

In May 2014, a curious message circled in the international media: Chilean activist and artist Francisco Tapia—better known as “Papas Fritas”—stole student promissory notes valued at US$500 million from the Universidad del Mar in Viña del Mar (Central Chile) and burned them in an “act of love.”6 In his 5 min self-denunciation on YouTube7 Tapia declared that it was a protest action against the ever-rising debt- mountain of Chile’s students, which in 2011 had already provoked a national debate on structural indebtedness of Chileans:

It’s done […] Nobody has to pay back one single peso anymore. We lost our fear: the fear of being perceived as criminals only because we are poor.8 Even though Tapia’s “act of love” explicitly dedicated to the “ﬁ nancial liberation” of the students remained a symbolic act—the police started criminal investigations against him, and the students will nevertheless have to repay their debts—, the artist explained that

Our job as artists is to inﬂ uence reality and to point out social problems.9 The burning of student promissory notes was intended as a metaphor for what can be considered indeed as one of the most pressing social problems in current Chile: the commercialization of education. In 2011, Patricio Meller, senior fellow and director of the Santiago-based Corporation for the Study of Latin America /Corporación de Estudios para Latinoamérica (CIEPLAN) and ordinary professor for industrial engineering at the Universidad de Chile, published the following facts about the overall educational situation in his book “Students: The problem is not proﬁ tmaking, but the market!”10 : – Tuition fees of Chilean universities are the highest worldwide in comparison with the country’s GDP per capita (41 %). – There has been a considerable rise of fees over time (60 % over the past 12 years).

6 Der Spiegel: Activist Francisco Tapia: The man who burned US$500 million [Aktivist Francisco Tapia: Der Mann, der 500 Millionen Dollar verbrannte], May 19, 2014, http://www.spiegel.de/ unispiegel/studium/studenten-protest-in-chile-francisco-tapia-verbrennt-schuldscheine-a-970361. html . 7 YouTube: Artista conﬁ esa haber quemado letras para acabar con las deudas de estudiantes de la Universidad del Mar, May 12, 2014, https://www.youtube.com/watch?v=upmmUzislj8 . 8 Ibid. Translation from Spanish by the authors. 9 H. Cossio and T. Oliveros: Papas Fritas: El confrontacional compromiso del artista que quemó los pagarés de la Universidad del Mar. In: El Mostrador, May 15, 2014, http://www.elmostrador.cl/ cultura/2014/05/14/papas-fritas-el-confrontacional-compromiso-del-artista-que-quemo-los-pagares- de-la-universidad-del-mar/ . 10 Ingeniería Industrial, Universidad de Chile: Patricio Meller lanzó libro‚ Universitarios: El problema no es el lucro, es el Mercado!’, September 13, 2011, http://www.dii.uchile.cl/2011/09/13/ patricio-meller-lanzo-libro-“universitarios-¡el-problema-no-es-el-lucro-es-el-mercado ”/. 162 R. Benedikter et al.

– Public spending on higher education is among the lowest worldwide (0.5 % of the GDP). – Chile has the highest rate of educational indebtedness worldwide: The relationship between the average loan for university attendance and the respective projected income per year is 174 % (US: 57 %).11 Thus, it is little surprise that education has become the main grievance of Chile’s new generation—a concern that has exercised increasing inﬂ uence on the development of politics and democracy in contemporary Chile.

The Educational System: A Heritage of the 1980s and 1990s

In order to understand Chile’s leftist student protest movement, its roots in the history of the nation, and its impact on politics, it is fi rst of all worth remembering that the fi rst hit on the establishment concertacionista—which was the leftist party alliance that led the political process of transition into democracy—occurred during Bachelet’s fi rst mandate in 2006 when high school students, nicknamed penguins due to their black and white uniforms, marched in the streets expressing their discontent with the Constitutional Organic Law on Teaching /Ley Orgánica Constitucional de Enseñanza (LOCE). The LOCE had been introduced by Augusto Pinochet on March 10, 1990, the last day of his dictatorship. It constitutionally altered the general notion of education, how it was fi nanced, and who had access to it.12 Most important, the LOCE formed the basis for the continuation of the privatization process of the educational sector within the new system of democracy by defi n- ing only minimum requirements for schools on all levels as well as specifi c tasks of the state with regard to the standardization, regulation, and offi cial recognition of educational qualifi cations. Among the goals of the military junta behind this law was not only the reduction of the power of the traditional public universities and an increase of competition between the institutions in order to improve quality and effi ciency, but also a partial cost transfer of educational expenditure from the state to the students and their families.13 As a consequence, today there are three types of schools and universities in Chile: 1. Public schools and universities 2. Subsidized private schools and universities 3. Private schools and universities

11 P. Meller: Universitarios: El problema no es el lucro, es el Mercado!, Uqbar Editores, Santiago de Chile 2011. 12 A. Bellows: La Derecha Contemporánea en Chile – su Rol en el Movimiento Estudiantil. Independent Study Project (ISP), John Hopkins University, 2011, p. 14, http://digitalcollections. sit.edu/cgi/viewcontent.cgi?article=2172&context=isp_collection . 13 J. J. Brunner and G. Briones: Higher Education in Chile: Effects of the 1980 reform. In: L. Wolff and D. Albrecht (eds.): Higher Education Reform in Chile, Brazil and Venezuela. The World Bank, Washington DC 1992, pp. 5-7. 7 The Educational Dimension: Michelle Bachelet II’s… 163

As a result of the in essence neoliberal decisions of the 1980s and 1990s Chile today is often mentioned as a “role model” for the most privatized and market- oriented educational systems worldwide14 and is regarded as one of the main dem- onstration grounds of the transfer of neoliberal ideas from Chicago to Latin America, including its schools and universities, through young Chilean economists— The Chicago Boys —in the 1970s and 1980s. Nowadays, education has become a profi table business particularly for Chile’s elite despite the offi cial ban of profi tmaking in the sector. Over the past 30 years more than 250 public schools have been closed while approximately 2,500 private schools were opened. 15 In 2011, 60 % of Chile’s primary and secondary students16 and 80 % of university students 17 attended private institutions that take considerable—and for some unaffordable—tuition fees ranging from $4,000 to $10,000 USD per year,18 which many Chileans have to fi nance through bank loans. As Kevin Rolwing and Nick Clark analyze,

Compared to its regional neighbors, Chile has enjoyed a long period of economic growth and prosperity, which today makes it the most afﬂ uent country in Latin America by most economic measurements, even if that wealth is spread unevenly throughout society. With regards to education, this growing national prosperity has—in part—led to rapidly increasing enrollments at the tertiary level and an opening of access to all segments of society. However, this enrollment growth has almost exclusively been within the private sector and led primarily by market forces, with 80 percent of students today enrolled at a private institution of higher education. This has led to concerns over quality, affordability, and to increasingly vocal and violent calls for reform. […] In 2012, 56 percent of the nation’s 620,000 university students were enrolled in the private sector, four times as many as were enrolled in any type of university program in 1994. Overall, 80 percent of students at the tertiary level are enrolled in the private sector , according to government data published by the UNESCO Institute of Statistics, three decades after tuition fees were legally allowed to be levied. […] As it currently stands, Chilean universities are among the most expensive in the world when measured against per capita income, which is no doubt a factor in the nation’s high dropout rate. It is estimated that Chilean families pay more than 75 percent of the costs associated with higher education, compared to 40 percent in the United States and just 5 percent on average in Scandinavian countries.19

14 D. Salinas and P. Fraser, Pennsylvania State University: Educational Opportunity and Contentious Politics: The 2011 Chilean Student Movement. In: Berkeley Review of Education, Volume 3, No. 1, pp. 17-47, here: p. 18, http://escholarship.org/uc/item/60g9j416#page-1 . 15 M. Skambraks: Chile closes more than 40 public schools [Chile schließt mehr als 40 öffentliche Schulen]. In: amerika21, February 18, 2013, http://amerika21.de/2013/02/77923/chile- schliessung-schulen . 16 V. Smink: Las razones de las protestas estudiantiles en Chile. In: BBC Mundo, August 10, 2011, http://www.bbc.co.uk/mundo/noticias/2011/08/110809_chile_estudiantes_2_vs.shtml . 17 P. Meller: Universitarios: El problema no es el lucro, es el Mercado!, loc cit., p. 20. 18 A. Bellows: La Derecha Contemporánea en Chile – su Rol en el Movimiento Estudiantil, loc cit., p. 15. 19 K. Rolwing and N. Clark: Higher Education in Chile. In: World Education News & Reviews (WENR), December 6, 2013, http://wenr.wes.org/2013/12/introduction-to-the-higher-education- system-of-chile/ . 164 R. Benedikter et al.

This leads to a situation that affects all educational levels:

The private sector has also been growing enrollments at the primary and secondary level, with over 55 percent of Chilean students attending private schools , most subsidized by the government through a national voucher system, and many operated by the Catholic Church. The capital Santiago has 272 Catholic schools, including some of the most expensive in the country. Contrary to the tertiary sector, private secondary schools consistently teach to higher standard than their public counterparts, leading to a situation—not uncommon in Latin America—whereby students from rich families earn state-subsidized university places by paying for top quality private secondary schooling, while publicly educated secondary students head in much higher numbers to lesser quality private institutions of higher education. According to a recent study by the OECD and the World Bank, public spending on higher education in Chile is the lowest as a proportion of GDP among OECD countries. On average Chilean public universities receive over 80 percent of their operating budgets from sources other than government subsidies. This comes mainly in the form of tuition payments, which means that the less afﬂ uent need to take out large loans to cover their costs. The system is one of the most privatized in the world, both in terms of funding and total enrollments.20

The “Post-Penguin” Crisis

In 2006, Chile’s high school students, the “Penguins,” went on the streets to ask for equal access, better quality of the public educational system, and the abolition of study fees. Although they did not achieve most of their objectives, i.e., a more participatory and tuition-free educational system, their protest movement wrote history as the “Penguin revolution,” which indicated the ﬁ rst serious rift in the now democratic Chilean social fabric. The student mobilization of that time created the basis for the public expression of larger social discontents, which had grown gradually in increasing parts of the population, eventually including the demand for radical measures such as the nationalization of copper. Reﬂ ecting a posteriori, the students noted in the retrospective chronicle of their journey in 2008:

At the end of May 2006 Chile was surprised by a massive student protest. This time the protagonists were not university students but high school students. The protest, later known as the ‘penguin revolution’ […] had started with selective claims such as free student transport and free university entry exams, but soon became a profound questioning of Chile’s educational reform [at the end of the dictatorship, note by the authors] and of the speciﬁ c funda- ments of the country’s educational system [i.e. the neoliberal model, note by the authors]. […] The right of participation, and especially the right of student participation emerges as an essential component of the processes of educational reform […] and as core dimension of the right for good-quality education. The Chilean ‘educational model’, baptized and projected as such by international ﬁ nancial organisms, in 2006 suddenly was kept in check by its most important, but less considered actors: the students, who were transformed overnight from

20 Ibid. 7 The Educational Dimension: Michelle Bachelet II’s… 165

benefi ciaries into actors, from consignees into protagonists. It ironically was as it was expressed once by the fi nancial organisms themselves: ‘If education is a market, then the clients have the word’.21 But although the high school and later university student movements from 2006 onwards constituted an important element of criticism within the transition to a more participatory and less elitist democracy, their voice wasn’t heard outside the country. The international perception of the Chilean educational model focused on indicators demonstrating the expansion of coverage of higher education, which on the one hand created new educational opportunities for parts of the population historically lacking that privilege, but on the other hand also produced new diffi culties linked to the increase of structural indebtedness and socioeconomic discrimination within Chilean society. In response, the “penguins” promoted a concept of education not as a privilege and market opportunity, but as a fundamental and inalienable right putting two main features on their fl ag: non-profi tmaking and quality. In 2006 president Bachelet became the main target of criticism regarding these two features. Under pressure from persistent student protests she convened the Presidential Advisory Council for Education / Consejo Asesor Presidencial de la Educación that brought together different actors linked to the educational process, including high school students. The goal was to develop a new educational law destined to replace the LOCE of the dictatorship. The new General Law of Education /Ley General de Educación , or LGE was announced in 2009. It reformed some features of primary and secondary education. Nevertheless, these changes were not of a structural nature as they didn’t change the basic mechanisms in place, such as commercialization, privatization and huge gaps in quality between public and private; nor were they designated for the higher (tertiary) educational sector. Thus the 2009 reform of the government Bachelet I left many demands of high school students unsatisfi ed. As a result, it was predictable that the demands of the social actors supporting the protest movement 1. Would shift over time towards the higher educational sector, simply because of the aging protagonists and their biographical transfer to the university and its specifi c educational conditions. 2. That discontent was likely to deepen with the arrival of the fi rst center-right government in the post-transition phase to democracy, i.e., the government of Sebastián Piñera (2010–2014). Both expectations became reality. However, few expected such a massive social explosion in the aftermath of governmental change in 2010, when Sebastian Piñera became the fi rst democratically elected center-right president in 50 years since Jorge Alessandri. Well aware of the underlying discomfort, Piñera declared the year 2011 as the Year of Higher Education /Año de la Educación Superior envisaging

21 Movimiento Estudiantes Chile: La Revolución de los Pingüinos (2006), September 9, 2008, http://movimientoestudianteschile.blogspot.de/2006/12/movilizacin-estudiantil-en-chile.html . Translation from Spanish by the authors. 166 R. Benedikter et al. ambitious, but contested, reforms. The result was the 2011 student protest movement— with the “Penguins” now attending university—which led to the largest mass protests since the return of democracy. In response, the Piñera government planned to increase governmental spending for public universities, but on the condition of letting ﬁ nancial support depend on “performance,” i.e., related to market demand in order to increase the competition between public and private institutions.22 Without doubt, Piñera’s rise of subsidies for public institutions in essence met the demands of the then student movement. Nevertheless, the logics of the free market in the educational sector continued to foster the quality of private schools while handicapping that of public schools. Thus students of the most vulnerable families—generally coming from the public high school system—continued to do comparatively worse in the university entry exams23 necessary for the traditional, partly subsidized universities, were not accepted, and could therefore ironically often only have the option of attending the most expensive private universities. In 2011, Raúl Irrazabal, education expert at the Center for Social Studies /Centro de Estudios Sociales (CIDPA),24 commented in an article for BBC Mundo:

Education is no longer a mechanism improving social mobility, but has turned into the opposite: a system of the reproduction of inequality. 25 In May 2011 the student protest movement started to occupy university buildings in Santiago and called for demonstrations against the conditions of the educational system. In the announcement of public protest on May 12, 2011, the Confederation of Chilean Students (CONFECH26 ) declared:

Education in Chile is in deep crisis. This is evidenced by the terrible quality of many institutions, the poor access to them by the most vulnerable sectors, the excessive indebtedness of families, the continued softening of the role of the state and its institutions, the open proﬁ t- making of many private institutions—outside the existing law—and the explicit prohibition of the university community to participate in the development of the institution as such. The students assembled in the CONFECH want to denounce the non-existence of the right for education in Chile and the false claim of higher education to serve as a tool for social mobility. In this sense education today doesn’t serve as a tool for harmonic development of Chile’s cultural, political, social and economic dimensions.27 At the beginning of the public protest marches in 2011 the main protagonists were university students. But soon the protests included more and more actors such as teachers and professors, public intellectuals, social organizations, workers unions, and family members. At that moment the students were demanding a free,

22 D. Salinas and P. Fraser: Educational Opportunity and Contentious Politics: The 2011 Chilean Student Movement, loc cit., p. 20. 23 V. Smink: Las razones de las protestas estudiantiles en Chile, loc cit. 24 Centro de Estudios Sociales CIDPA: http://www.cidpa.cl/ . 25 Ibid. 26 CONFECH: http://www.feusach.cl/confech/ . 27 K. G. Jackson/Confederación de Estudiantes de Chile (CONFECH): Student’s Call for Protest: May 10, 2011/Convocatoria Movilización y Paro Nacional: 12 Mayo, 2011, http://de.scribd.com/ doc/54542995/Convocatoria-12-Mayo . Translation from Spanish by the authors. 7 The Educational Dimension: Michelle Bachelet II’s… 167 public and equal education of good quality, selecting “No al lucro” (No to proﬁ t) as their principal motto. During the succeeding months the educational protest movement joined forces with other local-speciﬁ c movements, e.g., women’s rights, indigenous, and environmental movements, and received considerable (and in the view of many, surprising) support from society at large: 70–80 % of Chileans continuously approved the student demands between August 2011 and September 2012.28 Additionally, along with growing violence and police repression in the course of demonstrations, an old form of protest returned: the Cacerolazo , derived from the Spanish word cacerola (saucepan). It refers to a collective pan banging and a con- cert of noise on the streets and out of people’s windows, mostly at night, as a sign of enduring and invincible protest:

Although this form of protest originated in the 1970s when upper-class housewives began protesting against the socialist government of Salvador Allende, in the 1980s its signiﬁ - cance took a 180-degree turn. Cacerolazos became a popular form of protest against the dictatorship of Pinochet, mainly because people could protect themselves from repression because of the darkness of the night. This form of protest was largely absent from demonstrations during the initial post-dictatorship democratic period in Chile. The fact that it was brought back again for the ﬁ rst time since the Pinochet dictatorship in 2011 was symbolic because some members of Piñera’s administration were former Pinochet’s supporters or even members of his government. By protesting in a way that reminded citizens of the time of the dictatorship, the [student protest] movement tried to revive a basic ideological dichotomy of that time: the people/public versus the government/private [dichotomy]. 29

Piñera’s Proposal to Solve the Crisis of the Educational Sector

At the end of June 2011, for the ﬁ rst time since the beginning of demonstrations, the minister of education Joaquín Lavín (in charge from March 2010 until July 2011) delivered a detailed response to the students petitionary. He proposed an integrative, all-encompassing worktable to discuss all contended issues.30 According to an article by Chilean media provider Publimetro , the proposal contained the following seven points31 : 1. Creation of a rehabilitation fund of around US$75 million for public universities in order to strengthen public education as compared with private universities.

28 GFK Adimark: Encuesta de opinión pública - Evaluación gestión de gobierno, septiembre 2012, http://www.adimark.cl/es/estudios/index.asp?id=163 . 29 D. Salinas and P. Fraser: Educational Opportunity and Contentious Politics: The 2011 Chilean Student Movement, loc cit., p. 34. 30 Emol Chile: Lavín acoge algunas demandas de universitarios y propone mesa de trabajo. June 21, 2011, http://www.emol.com/noticias/nacional/2011/06/21/488467/lavin-acoge-algunas- demandas-de-universitarios-y-propone-mesa-de-trabajo.html . 31 Publimetro: La propuesta de 7 puntos que Lavín entregó a los estudiantes. June 22, 2011, http:// www.publimetro.cl/nota/cronica/la-propuesta-de-7-puntos-que-lavin-entrego-a-los-estudiantes/ xIQkfv!uk4RAIRnGG8kY/ . 168 R. Benedikter et al.

2. Expansion of law benefi ts and renegotiation with debtors of the Solidary fund for university credit /Fondo Solidario de Crédito Universitario. The solidary fund dedicated to partial or complete fi nancing of university fees and credit is assigned to fi nancially weak students who qualify for the support thanks to good results in the general university entry exam (PSU) and who apply for Chile’s traditional public universities. 3 . Transparency: Better control of adherence to the law prohibiting profi tmaking in the educational sector. 4 . Teachers: Rounds of dialogue with regard to the duties of teachers, including quality assurance. 5 . Students : Freedom of assembly and organization in the framework of educational institutions. 6 . National Credit Aval /Crédito con Aval del Estado (CAE): Reduction by law of interest rates on general student credit (5.8 % before 2011, proposed: 2 %). 7 . National Student Card (TNE): within a period of 45 days the Ministry of Education wanted to deliver a proposal for expansion of the free student travel pass over the whole year, although Minister Lavín requested that the students “make a proper use of the card.”32 The document was handed over in a personal meeting between the former president of the student confederation FECH (Federación de Estudiantes de la Universidad de Chile ), Camila Vallejo, and Minister Lavín. Former student leader Vallejo commented:

Finally there seems to be a concrete answer, but obviously some points are still missing. […] This document will now circulate between Arica and Magallanes [i.e. the most Northern and Southern university cities of Chile, author’s note]. Evidently we will discuss the further steps, whether there will be a worktable or negotiations or not, but this needs in any case to be discussed by the students and professors.33 On the same occasion, Jaime Gajardo, President of the alliance of traditional universities (Colegio de Profesores ), assured:

We will now analyze everything in each university separately. Afterwards we will see if we go for negotiations with Minister Lavín… 34

A Chance of Agreement, Vanished All Too Soon

According to high-ranking sources in the Ministry of Education known to the authors, the seriousness of the agreement was dubious from the beginning. Despite the existence of a protocol of agreement between Lavín and the student leaders,

32 Emol Chile: Lavín acoge algunas demandas de universitarios y propone mesa de trabajo. June 21, 2011, loc. cit. 33 Publimetro: La propuesta de 7 puntos que Lavín entregó a los estudiantes. June 22, 2011, loc. cit. Translation from Spanish by the authors. 34 Ibid. Translation from Spanish by the authors. 7 The Educational Dimension: Michelle Bachelet II’s… 169 some minutes before the planned signature the agreement was canceled by an alleged call from President Piñera. Thus, Lavín retained the printed document, provoking the annoyance of Vallejo, who in turn unambiguously made clear that from then on any possibility for agreement had vanished and that protests and petitions would sharpen—an announcement that turned out to be factual as the course of events showed in the succeeding months. What was the reason for the rejection of the student’s demand for free education by the Piñera administration, and similarly by the previous governments of the leftist Concertación ? According to Chilean education expert Raúl Irrazabal, the problem was (and to the present day remains) ideological rather than a lack of money or the interests of institutional actors and of realpolitik . In his opinion, both the different agents of the center-left and center-right preferred to maintain the “classical” neoliberal logic that converted Chile from an emerging into a comparatively rich country and let the educational market regulate itself. Both the center-left and the center-right did so for different reasons and despite colliding projections of positive development.35 In this view, the position of Piñera’s ﬁ rst Minister of Education Lavín, who allegedly belonged to the core group of the Chicago Boys ,36 was complicated from the start. As acting educational minister in June 2011 he publicly admitted in the Chilean TV program “Tolerancia Cero” (broadcast by Chilevisión ) that he had in some way completely “recovered” what he had privately invested into the Universidad del Desarrollo, the university founded by members of the center-right party UDI (Unión Demócrata Independiente ):

I did not lose any money in the Universidad del Desarrollo [org.: No he perdido plata en la Universidad del Desarrollo ].37 It was this on the one hand frank and open, and at the same time all too sincere admission of an acting minister in the specifi c context of Chile’s legally forbid- den market and profi t orientation of the educational sector that initiated a long path of accusations. Their common theme was that acting politicians, irrespective of their political color, had no interest in reforming the educational sector because they were direct benefi ciaries of its neoliberal interpretation—an accusation which started with Lavín and continued with his successors Felipe Bulnes and Harald Beyer. Ironically, instead of a potential agreement between the center-right government and the leftist student protest movement the outcome was that the refusal of the agreement confi rmed and exacerbated the symbolic-political power of the student

35 V. Smink: Las razones de las protestas estudiantiles en Chile. In: BBC Mundo, loc cit. 36 Diario de Leon: Joaquín Lavín: Última oportunidad para el “Chicago boy” católico, November 12, 2005, http://www.diariodeleon.es/noticias/internacional/joaquin-lavin-ultima-oportunidad- chicago-boy-catolico_232788.html . 37 Cooperativa.cl: Joaquín Lavín: No he perdido plata en la Universidad del Desarrollo, June 13, 2011, http://www.cooperativa.cl/joaquin-lavin-no-he-perdido-plata-en-la-universidad-del-desarrollo/prontus_nots/2011-06-12/234619.html . 170 R. Benedikter et al. protest movement, which in practice tied Piñera’s hands three times by provoking the fall of three of his Ministers of Education in a row between 2010 and 2013 (Lavín in 2011, Bulnes in 2011, Beyer in 2013).

The Chilean Ministry of Education: A Fluctuating and Even Dangerous Ofﬁ ce

In open contradiction to Lavín’s statements regarding his private investments in the educational sector as co-founder of the Universidad del Desarrollo , the minister assured in “Tolerancia Cero” that

the non-proﬁ t spirit in universities is respected.38 In consequence, Lavín did not have to wait long for a reaction from the student protest movement. Only a week after the broadcast of the program, high school and university students assembled before the Ministry of Education in Santiago de Chile on June 21, 2011, in order to demand Lavín’s resignation. Eduardo Salazar, President of the student federation of the UTEM (Universidad Tecnológica Metropolitana ), stated:

In full accordance with the high school students we are demanding Lavín’s resignation because of his confl icts of interest. We would like to remind the public that he admitted in a TV program that he had profi tability when participating in the Universidad del Desarrollo. In our view, it is not possible that a person who makes profi t in education […] dictates the future politics of the educational system.39 A month later, after having lost 24 % points in the minister’s approval rate (from 70 to 46 %) in the monthly Adimark survey on government ’ s performance , 40 Lavín offered president Piñera his resignation from offi ce “in an act of political generosity”41 with the objective of not converting himself into a “stone at the top”42 (org.: “en una piedra de tope”) obstructing the “solution” of the student confl ict. In this way, the student movement was able to infl uence, even to transform the government to their advantage. Accordingly, the former president of the student

38 Ibid. Translation from Spanish by the authors. 39 La Tercera: Estudiantes secundarios y universitarios piden la renuncia del ministro Lavín, June 6, 2011, http://www.latercera.com/noticia/educacion/2011/06/657-374465-9-estudiantes- secundarios-y-universitarios-piden-la-renuncia-del-ministro-lavin.shtml . Translation from Spanish by the authors. 40 J. Canales: Lavín cae 24 puntos en encuesta Adimark y encabeza de aprobación al gabinete. In: La Tercera, July 7, 2011, http://www.latercera.com/noticia/politica/2011/07/674-378040-9-lavin- cae-24-puntos-en-encuesta-adimark-y-encabeza-baja-de-aprobacion-al.shtml . 41 J. Maltrain: Chadwick conﬁ rmó que Lavín pidió su salida del Ministerio de Educación, July 19, 2011, http://www.latercera.com/noticia/politica/2011/07/674-380545-9-chadwick-conﬁ rmo-que- lavin-pidio-su-salida-del-ministerio-de-educacion.shtml. Translation from Spanish by the authors. 42 Ibid. Translation from Spanish by the authors. 7 The Educational Dimension: Michelle Bachelet II’s… 171 federation FEUC (Universidad de Chile) and later Member of Parliament since 2013, Giorgio Jackson, stated:

The citizens and social movements of this country have enforced political change. The social movement that pointed to the conﬂ icts of interest […] has triggered this crisis.43 Paloma Muñoz, speaker of the Metropolitan Federation of High School Students /Federación Metropolitana de Estudiantes Secundarios (FEMES) added:

The minister was a quite big obstacle, but the problem is not the minister; it is structural.44 Interestingly, Lavín’s nonoffi cial, but quite public “confession” turned into the origin of an empirical investigation of illegal profi tmaking in the education sector— undertaken mainly by intellectuals and journalists, and starting in 2011 with a focus on the Universidad del Desarrollo and ending in 2014 with a focus on the Universidad Arcis, which appears to be fi nanced and administrated by the Communist Party.45 As indicated by the fall of ministers during the Piñera administration—due to confl icts of interest and the alleged lack of control of profi tmaking in educational institutions—the problem was never limited to Lavín, nor originating from any person, be it a single minister or his offi cials. Felipe Bulnes (Minister of Education, July 2011–December 2011) voluntarily resigned after 6 months and the confrontation with student protest mobilizations.46 Harald Beyer (Minister of Education, December 2011–April 2013) refused to renounce offi ce after being charged with “poor management” and “failure of carrying out the duties as minister.”47 The charge against Beyer for “failing” as Minister of Education was approved with 20 against 18 votes in the Senate of Chile48 despite an international supporting letter by Latin America’s intellectuals and the outspoken sustain of academics and technocrats of different sectors written on April 9, 2013, in Rosario (Argentina) 49

43 Publimetro: Estudiantes valoran salida del ministro Joaquín lavín, July 18, 2011, http://www. publimetro.cl/nota/cronica/estudiantes-valoran-salida-del-ministro-joaquin-lavin/ xIQkgr!wAHhRGs5eXFaM/ . Translation from Spanish by the authors. 44 Ibid. Translation from Spanish by the authors. 45 R. Alvarado: La crisis de la Universidad Arcis que complica al Partido Comunista. In: The Clinic, May 27, 2014, http://www.theclinic.cl/2014/05/27/la-crisis-de-la-universidad-arcis-que- complica-al-partido-comunista/ . 46 Emol: Bulnes: Renuncié por mi convicción política de que concluyó una etapa, December 29, 2011, http://www.emol.com/noticias/nacional/2011/12/29/519344/felipe-bulnes-renuncie-por-mi- conviccion-politica-de-que-se-ha-concluido-una-etapa.html . 47 The Santiago Times: Chilean education minister impeached by Senate in landmark vote, April 18, 2013, http://santiagotimes.cl/chilean-education-minister-impeached-by-senate-in-landmark- vote/ . 48 La Tercera: Senado destituye a Harald Beyer tras aprobar la acusación constitucional por 20 contra 18 votos, April 17, 2013, http://www.latercera.com/noticia/politica/2013/04/674- 519156-9-senado-destituye-a-harald-beyer-tras-aprobar-la-acusacion-constitucional-por-20. shtml . 49 Capital Online: La trastienda de la carta de apoyo a Beyer, April 19, 2013, http://www.capital.cl/ coffe-break/2013/04/19/070413-la-trastienda-de-la-carta-de-apoyo-a-beyer . 172 R. Benedikter et al. on the occasion of the 25th anniversary of the Argentinian think tank Fundación Libertad . Among those who signed in support of Beyer were Peruvian writer, politician and journalist Mario Vargas Llosa, who won the Nobel Prize for Literature in 2010 and who is considered one of Latin America’s most signiﬁ cant novelists of all times; Gerado Bongiovanni, director of the think tank Fundación Libertad ; Argentinian economist and academic Martín Krause, adjunct scholar at the CATO Institute and member of the Mont Pelerin Society; Argentinian academic and economist Alberto Benegas Lynch, member of the Advisory Council of the Institute of Economic Affairs in London, two times temporary member of the Governing Council of the Mont Pelerin Society and associated academic at the Cato Institute and the Ludwig van Mises Institute; and Eugenio Guzmán, Dean of the Governmental Faculty of the Universidad del Desarrollo . 50 As an effect of such high-ranking support, many thought that the replacement of Beyer was a political rather than a professional act; and there are many who are still of this opinion today. This remains the case even after Beyer received rather ruthless international criticism for one of his ﬁ rst actions as Minister of Education: to replace the word “military dictatorship” by the more general term “military regime” in the history books for Chilean primary schools.51

Education in Chile: A Difﬁ cult Task

Overlooking these elements, in summation, education in Chile has historically always been a highly politicized issue with a remarkable international dimension. This is not only evidenced by the “imported” neoliberal ideas from Chicago in the 1980s that were crucial to the implementation of the liberal market model throughout all levels of education, but also by the fact that the destiny of education ministers in a small country in South America fi nds such an outstanding international interest and support—although considerable part of it behind the curtains and on informal channels. Considered together, the post of Minister of Education in Chile—independent of center-left or center-right affi liations—seems to be a major challenge since it is always embedded in a fi eld of tension between political, social, and ideological principles. Furthermore, it is worth recalling that the all too easy fall of ministers of education in Chile is not a specifi c feature of the Piñera administration. For example, Martín Zilic and Yasna Provoste have also been substituted during the government Bachelet I (2006–2010) because of the “insuffi cient management” of the “Penguin”

50 Ibid. 51 The Clinic: Harald Beyer y el reemplazo de dictatura militar en textos escolares es más general, January 4, 2012, http://www.theclinic.cl/2012/01/04/harald-beyer-y-el-reemplazo-de-dictadura- a-regimen-militar-en-textos-escolares-es-mas-general/ . 7 The Educational Dimension: Michelle Bachelet II’s… 173 protests (Zilic)52 and alleged fi nancial irregularities in the audit of subsidies to the amount of US$600 million (Provoste).53 In fact, it has become a historical constant that the Ministers of Education are the worst rated of every Chilean government both of center-left and center-right coalitions. It has even happened that ministers of other fi elds assuming the offi ce of education had an automatic fall in their approval ratings by merely doing the switch. For example, Carolina Schmidt—the last Minister of Education in the Piñera government (April 2013–March 2014)—left her offi ce as head of the National Service for Women /Servicio Nacional de la Mujer (SERNAM) with the second highest rating with 71 % in April 2013 54 and became the worst rated minister of cabinet (as Minister of Education) with 35 % in May 2013,55 i.e., within only 1 month.

Bachelet II’s Minister of Education: Nicolás Eyzaguirre

In Bachelet’s second mandate since March 11, 2014, a new team continued with the historical trajectory of low public confi dence in governmental representatives in the Ministry of Education. According to Adimark the new Minister of Education, Nicolás Eyzaguirre, after only 3 months in offi ce was the best known (87 %) and worst rated minister (47 %) in June 2014.56 Who is the man vowing to end educational profi tmaking and socioeconomic segregation of students and schools, as Bachelet promised innumerable times during her reelection campaign in 2013? Chilean online media En altavoz put it in one provoking phrase:

The CV of Eyzaguirre: from social leader to defender of the model, from defender of the model to ‘convert’. 57 At the start of the 1980s the trained developmental economist (Universidad de Chile) Eyzaguirre was a well-known student leader, activist of the Communist Party, and co-founder of the Party Izquierda Christiana .58 According to En altavoz ,

52 El Mostrador: Mundo de la educación “sorprendido” por salido de ministro Martin Zilic, July 15, 2006, http://www.elmostrador.cl/pais/2006/07/15/mundo-de-la-educacion-sorprendido-por-salida- de-ministro-martin-zilic/ . 53 La Tercera: Yasna Provoste auge y caida de una ministra, April 16, 2008, http://www.latercera. com/noticia/politica/2008/04/23-4212-9-yasna-provoste-auge-y-caida-de-una-ministra.shtml . 54 GFK Adimark: Evaluación de Gobierno, April 2013, http://www.adimark.cl/es/estudios/archivo. asp?id=181 . 55 GFK Adimark: Evaluación de Gobierno, April 2013, http://www.adimark.cl/es/estudios/archivo. asp?id=183 . 56 GFK Adimark: Evaluación de Gobierno, Junio 2014, http://www.adimark.cl/es/estudios/documentos/4_eval%20gobierno%20jun_2014.pdf , pp. 23-24. 57 I. Gajardo: Diversas reacciones desata nombramiento de Nicolás Eyzaguirre como Ministro de Educación. In: En altavoz, January 28, 2014, http://www.enaltavoz.cl/2014/01/ diversas-reacciones-desata-nombramiento-de-nicolas-eyzaguirre-como-ministro-de-educacion/ . 58 Ibid. 174 R. Benedikter et al. he then made a sudden 180-degree turn when he moved to study economics in the USA in 1982:

Those who met him at that time tell that they had never imagined Eyzaguirre returning from the U.S., where he completed advanced studies in economics, being now convinced that the neoliberal model is working well and that this approach would be the right solution for the problems of Chilean society. 59 It was assumingly his stay at Harvard University (1982–1985)60 that provoked his change of mind. Nevertheless in July 2014, three decades after his return to Chile, Eyzaguirre had to renounce to his PhD grade from Harvard since contradictory information was found, as Chilean media Emol reported:

The webpage of the Chilean government afﬁ rms Eyzaguirre to be holding a ‘PhD in Economics from Harvard University’, while the webpage of the Ministry of Education indicates that he is a ‘Doctoral candidate in Economics with focus on Macroeconomics and International Trade at Harvard University’. 61 Chilean media Chile B additionally reported:

However, the authorities at Harvard and an offi cial certifi cate of the NSC [National Student Clearinghouse]—the major institution registering academic degrees of American universities—indicate that Eyzaguirre is not a doctoral candidate and was only a student in the institution until 1985 when he received a Master of Arts in Economics. 62 Without doubt, these revelations of allegedly problematic academic degrees put Eyzaguirre’s legitimacy to the test, especially in his role as acting Minister of Education, and may potentially predestine him to continue Chile’s proverbial “fall of education ministers”. However, Eyzaguirre had without doubt an extraordinary career—both nationally and internationally—before assuming the post of Chilean Minister of Education. Between 1984 and 1985 he was an international adviser for the International Monetary Fund (IMF),63 from 1985 to 1990 he worked as a fi nancial policy expert for the United Nations Economic Commission for Latin America and the Caribbean (CEPAL),64 and from 2000 to 2006 he occupied the post of Minister of Finance in the extended Government of Ricardo Lagos, becoming the person who remained for the longest period of time in that offi ce in Chile’s history. Some of his main achievements as Minister of Finance were the negotiations with Chile’s banks that resulted in the implementation of the National Credit Aval /Crédito con Aval del Estado

59 Ibid. Translation from Spanish by the authors. 60 Emol: Eyzaguirre rectiﬁ cará currículum tras dudas por doctorado en Harvard, July 10, 2014, translation from Spanish by the authors, http://www.emol.com/noticias/ nacional/2014/07/10/ 669247/eyzaguirre-rectiﬁ cara-su-curriculum-tras-cuestionamientos-por- doctorado-en-harvard.html . 61 Ibid. 62 F. Antunovic: Registros académicos de Harvard desmienten que Ministro Eyzaguirre sea candidato de Harvard. In: Chile B, July 8, 2014, http://www.chileb.cl/reporteros/registrosacademicos- de-harvard-desmienten-que-ministro-eyzaguirre-sea-candidato-a-doctor/ . 63 Economía y Negocios: Nicolás Eyzaguirre asumirá importante cargo en el FMI, August 28, 2008, http://www.economiaynegocios.cl/noticias/noticias.asp?id=52251 . 64 Ibid. 7 The Educational Dimension: Michelle Bachelet II’s… 175

(CAE), which on the one hand has expanded educational opportunities to new social sectors, but on the other hand provoked strong criticism from Chile’s students due to the high rates of interest (5.8 % until 2012). 65 Afterwards, between 2009 and 2012 Eyzaguirre returned to the IMF holding the prestigious offi ce of Director of the Western Hemisphere Department 66 and fi nally in 2012 became President of the infl uential Chilean TV channel Canal 13, owned by the Luksic family, previously mentioned as one of the most powerful “economic groups” in current Chile.

Minister Eyzaguirre: “Protector” or “Transformer” of Chile’s Educational Model?

Understandably, the nomination of Eyzaguirre as Minister of Education in January 2014—long before the revelations about his academic degrees—caused different reactions among Chile’s social actors. Gabriel Boric, Member of Parliament for the radical left, commented that Eyzaguirre’s nomination would cause “more uncertainty than certainty”67 and reminded that the minister was one of the “driving forces in the implementation of the National Credit Aval”68 :

I would like to ask Minister Eyzaguirre if he has radically changed his opinion with regard to this type of public policies. Furthermore we need to know what he thinks about other crucial issues, i.e. the end of profi tmaking with public and private funds, the fi nancing of institutions by the state, the necessity of public technical education [org.: educación técnica estatal ] and many other topics which the Minister has not addressed. He has not revealed a clear strategy in which direction education in this country should develop. 69 In contrast, the organization which represents professors working at the basic and intermediate level (CPC, Colegio de Profesores), who were the main recipients of state subsidies over the past decades, was rather satisfi ed with Eyzaguirre’s nomination, valuing his “long political trajectory,” “openness for dialogue” and “good will.”70 A leading exponent of the Colegio de Profesores, Professor Jaime Gajardo, added:

65 I. Gajardo M.: Diversas reacciones desata nombramiento de Nicolás Eyzaguirre como Ministro de Educación, loc. cit. 66 Economía y Negocios: Nicolás Eyzaguirre asumirá importante cargo en el FMI, loc. cit. 67 I. Gajardo: Diversas reacciones desata nombramiento de Nicolás Eyzaguirre como Ministro de Educación, loc. cit. Translation from Spanish by the authors. 68 Ibid. 69 Ibid. 70 Ibid. 176 R. Benedikter et al.

He has great political experience and will face tremendous challenges, because the major part of public attention [during the tenure of the government Bachelet II] will be on the educational reform.71 The current President of the student Federation FECH of the Universidad de Chile , Melissa Sepúlveda, explained the student’s skepticism as follows:

We know very little about Eyzaguirre’s position with regard to the concrete student demands […] The combination of an ambiguous governmental program and a minister with unclear positions could indicate the continuation of the same educational model of the previous governments of the [leftist alliance] Concertación … 72 According to En altavoz , the critical discourse of the social protest movement against Eyzaguirre is kind of a “natural syndrome,” since

It is no little endeavor that an economist of the International Monetary Funds, who in recent episodes of his professional career has defended the [neoliberal] model, who instigated a system of indebtedness [the National Credit Aval, author’s note], who supported the contested National Commission of [Educational] Accreditation [Comisión Nacional de Acreditación] now ‘converts’ and commits to carrying out an ambitious program of educational reform wanted by president Michelle Bachelet.73

Fallen Authorities in the Educational System Under the Government Bachelet II

Not only did the selection of Eyzaguirre to political authority on Chilean education signify a stumbling block for the government Bachelet II. It was compounded by the nomination of his fi rst sub-secretary Claudia Peirano, who only a week after her nomination—and a month before formally assuming offi ce—had to renounce to the post. This decision was linked to the revelation of her alleged involvement in prof- itmaking in the educational system. As it seems, she was linked with the Advisory agency Agencia de Asistencia Técnico Educativa (ATE) of her ex-husband Walter Oliva, allegedly helping subsidized private schools to generate profi t by the use of state funds.74 The exposure of such links caused severe criticism from student leaders, especially by those who had in the meantime entered parliament, such as Gabriel Boric and Camila Vallejo. But the major blow came from Peirano’s own son Ignacio

71 Ibid. 72 Ibid. 73 Ibid. 74 F. Skoknic and J. P. Figueroa: Nuevo nexo con escuelas de Walter Oliva hacía inviable permanencia de Claudia Peirano en Educación. In: Ciperchile.cl, February 4, 2014, http://ciperchile. cl/2014/02/04/nuevo-nexo-con-escuelas-de-walter-oliva-hacia-inviable-permanencia-de-claudia- peirano-en-educacion/ 7 The Educational Dimension: Michelle Bachelet II’s… 177

Oliva, who in 2014 was the vice president of the student federation FEUC of the Universidad Católica :

It is evident that there is a link between the sub-secretary and me, it is undeniable. However, today we have different roles, we are on opposite sides of the street.75 Shortly afterwards Peirano was replaced by the 32-year-old engineer Valentina Quiroga, who is the director of the team which elaborated the proposal for educational reform for Bachelet since April 2013.76 In 2008 Quiroga also co-founded the NGO Educación 2020 , which

articulates the country’s educational problems, develops policy proposals and impulses legislation with a 200,000 person strong social media following. 77 In 2012 Quiroga assumed the offi ce as managing director of the think tank Espacio Público . 78 Thus, the new sub-secretary—intentionally or unintentionally— has a widely different profi le to her predecessor Peirano. Quiroga comes rather from the “other side of the street” being a central fi gure of the criticism against the current educational system. Even though Quiroga is probably one of the “ideologists” behind Bachelet’s reform proposal, her level of infl uence on the further design and concrete implementation of the reform is not clear. Some voices even warn that her high capacity, strong conviction, and expert knowledge in education could become a weakness in face of the need for dialogue and balance expressed by all actors with regard to basic educational reforms that will need strong dialogical capacities, including patience.

The Reform Proposal: Free Education—But for Whom?

Since his arrival in the Ministry of Education, Nicolás Eyzaguirre has consequently opted for the politics of dialogue. He has held numerous meetings with all involved actors: the Council of the Alliance of traditional Universities (CRUCH), the Confederation of Chilean Students (CONFECH), the Council of University Presidents (Consejo de Rectores), the National Coordination of High School Students (CONES), and others. 79 As a result of the process of interviews and the different demands of these actors Eyzaguirre has been correcting and adapting his

75 Ibid. Translation from Spanish by the authors. 76 N. Hernández: Coordinadora del programa de Bachelet asume en subsecretaría. In: La Tercera, February 5, 2014, http://www.latercera.com/noticia/politica/2014/02/674-564072-9-coordinadora-del-programa-de-bachelet-asume-en-subsecretaria.shtml . 77 A. Wirth: What the United States Can Learn From Chile. In: The Hufﬁ ngton Post, September 29, 2013, http://www.hufﬁ ngtonpost.com/alex-wirth/what-the-united-states-ca_b_3833806.html . 78 N. Hernández: Coordinadora del programa de Bachelet asume en subsecretaría, loc cit. 79 El Dinamo: ¿Gratuidad para quién? Las idas y vueltas del ministro Eyzaguirre en sus reuniones con actores sociales, April 21, 2014, translation from Spanish by the authors, http://www.eldin- amo.cl/2014/04/21/gratuidad-para-quien-las-idas-y-vueltas-del-ministro-eyzaguirre-en-sus-reuniones- con-actores-sociales/ . 178 R. Benedikter et al. opinion towards the reform proposals repeatedly. Therefore he made some public declarations that partly generated confusion. Bachelet’s program envisages universal free education for 70 % of the students within 4 years—starting with the most vulnerable—and for the totality of students within 6 years, i.e., until 2020.80 However it is not explicit whether this regulation is only designated for public universities or subsidized private universities (i.e., private traditional universities) or for the totality of the educational system including purely private universities.81 To date, Eyzaguirre’s statements have not helped to clarify this crucial topic. On March 25, 2014, for example, he appeared on the TV program “El Informante” on TVN stating:

The universities are not equal. The public universities represent the place where we will construct the future, the culture and the knowledge of the country. This is why we privilege them with fundamental ﬁ nancing. […] The private universities [which today receive state subsidies, note by the authors] will still belong to an owner, and this owner will have a particular point of view, which is not the one of society. […] And what will happen if this owner in some moment has a dispute with the state?82 The reaction of the private universities came quickly. The president of the Pontiﬁ cia Universidad Católica, Ignacio Sánchez, argued on the TV channel Canal 13 :

The minister made some public declarations that seemed inappropriate to us, and we have told him that.83 Four days later Eyzaguirre corrected his opinion in a meeting with the professors of the CRUCH:

Knowledge is not a monopoly of public universities. The private universities with public tasks have made a tremendous outreach. That is why they will all beneﬁ t in order to develop investigation and science in Chile further.84 Some weeks later Eyzaguirre ﬁ nally commented during a meeting with the Educational Commission of the Senate:

I want to be extremely clear: The right to free education can be exercised by any university […] These can be public universities, private universities with public tasks and private universities which have no such tasks.85 Evidently, Eyzaguirre’s swerving statements were both 1. A refl ection of the enormous complexity involved in renovating or even rein- venting Chile’s educational system. 2. An expression of the power structures within the educational system and the corresponding fi ghts for resources and subsidies which have intensifi ed in times of transition.

80 Ibid. 81 Ibid. 82 Ibid. 83 Ibid. 84 Ibid. 85 Ibid. 7 The Educational Dimension: Michelle Bachelet II’s… 179

With regard to other pressing topics of educational reform, Eyzaguirre stated on March 13, 2014, on La Tercera :

It is completely unacceptable that some schools discriminate. Therefore we will introduce clear legislation with regard to this issue within the fi rst 100 days of government, and the same with regard to the end of profi t, the end of co-fi nancing of fees by students and the topic of discrimination at the point of selection of a school.86 Given that discrimination of applicants seems to be often tied to the municipal self-administration of public schools, president Bachelet in person added:

This government will put an end to the municipal administration of public schools and will return these schools to the state. For this we need to create a National Service of Education.87

May 2014: Bachelet Signs First Laws Regarding Education

According to the ofﬁ cial webpage of the Chilean government, president Bachelet signed the ﬁ rst reform laws on May 19, 2014. They include

A new institutionalization of preschool education, the end of illegal proﬁ tmaking in the educational sector, the end of discrimination in the selection of schools and the establishment of free education at the primary level. 88 In presence of the Minister of the Interior Rodrigo Peñailillo, the Minister of Finance Alberto Arenas, the General Secretary of the President Ximena Rincón, the General Secretary of the Government Álvaro Elizalde, and the Minister of Education Nicolás Eyzaguirre, president Bachelet stated:

Today we accomplish the promises made to the Chilean people to initiate a profound process of transformation of our educational system to assure quality, free education, integration and the end of proﬁ tmaking. […] It is not fair that the resources of all Chileans enrich particular persons instead of our educational system as a whole. The provision of education has a public dimension, which cannot be treated with the logics of the free market. We want that the only reason for pushing forward an educational project (in institutions receiving public funds) is the passion and the genuine vocation to educate students—and not the search for proﬁ t. 89

86 G. Moreno: Eyzaguirre adelanta los primeros proyectos de ley en educación que se enviarán al Congreso. In: La Tercera, March 13, 2014, http://www.latercera.com/noticia/nacional/2014/03/680- 569330-9-eyzaguirre-adelanta-los-primeros-proyectos-de-ley-en-educacion-que-se-enviaran. shtml . Translation from Spanish by the authors. 87 Ibid. 88 Chilean Government: Presidenta fi rma proyectos de Ley: Fin de lucro, selección y fi nanciamento compartido en educación escolar, May 19, 2014, http://www.gob.cl/2014/05/19/jefa-de-estado- fi rma-proyectos-de-ley-que-ponen-fi n-al-lucro-la-seleccion-y-el-fi nanciamiento-compartido-en- la-educacion-escolar-y-la-creacion-de-una-nueva-institucionalidad-parvularia/ . Translation from Spanish by the authors. 89 Ibid. 180 R. Benedikter et al.

But despite all governmental efforts to give the diffi cult and complex reform steps a clear profi le, the projects initiated with the signing of the reform law still largely lack in precision, as the following points of the governmental declaration confi rm: 1 . The end of profi tmaking is applied to “all institutions receiving public funds with the objective of ploughing profi ts back for the improvement of quality in education.”90 That sounds not like a clear cut, but rather as the start of an insecure process. 2 . The end of co - fi nancing of fees by students and their families is assured “by the gradual rise of funds for schools with the objective of decreasing co-fi nancing until its complete elimination. It is expected that in the third year after the application of the law the total resources paid by parents to subsidized institutions are matched by public funds.”91 It has to be seen whether this is a realistic goal, given the daily debates on variation and change on the reform. 3 . The end of discrimination and selection prohibits “institutions receiving public funds to apply mechanisms defi ning the access of students.”92 Except the university entry exams, there were not many other “mechanisms” offi cially in place neither in the past years, but in many cases just “habits” of accepting students, and these are the problem. It is unclear though if the planned mechanisms that are considered to replace the entry exams when there will be more student demand than study places, i.e., family relations with professors working in the institution and drawing,93 will be more appropriate to do justice. 4. The initiative for preschool education will “stimulate the construction of 4,500 kindergartens which will give place to 90,000 infants younger than 2 years and 1,200 nursery schools for the benefi t of 34,000 children.”94 Without doubt an ambitious goal. 5. The creation of “2 public universities in the regions Aysén and O’Higgins” and “5 centers of technical formation.”95 6. In addition, the government planned to publish the detailed texts of the laws regarding the “end of municipal administration,” the “development of national teaching politics,” and the “right of students in Chile to receive free higher education” as soon as possible.96

90 Ibid. 91 Ibid. 92 Ibid. 93 N. Eyzaguirre: Reforma Educacional: Proyecto de ley de fi n al lucro, la selección y el copago (2014-2018), http://reformaeducacional.gob.cl/wp-content/uploads/ProyectoLSCNEGSenado.pdf . 94 Chilean Government: Presidenta fi rma proyectos de Ley: Fin de lucro, selección y fi nanciamento compartido en educación escolar, loc cit. 95 Ibid. 96 Ibid. 7 The Educational Dimension: Michelle Bachelet II’s… 181

It remains doubtful if the announcements of this law match the task of an “extremely clear legislation” promised by Eyzaguirre at the beginning of March 2014. The law on educational reform of May 2014 rather defi nes goals without specifying the detailed way to achieve them; and it postpones the most crucial point (i.e., free higher education) to a later point. Such a text may not only refl ect the lack of consensus in the governing coalition with regard to the principles of educational reform, but seems to confi rm once again the need for suffi cient time to master the odds of simultaneous implementation of far-reaching structural reforms in areas such as taxation, education, and the constitution. In face of the criticism this law received, Eyzaguirre stated some days later:

I only ask for silence. Please let me do my work. If not, it is possible that this will become the next Transantiago .97 The origin of this statement was linked to the former Minister of Education Mariana Aylwin (2000–2003 in the government of Ricardo Lagos), who compared the educational reform task with the implementation of the transport system Transantiago in Chile’s capital in 2007. The introduction of that then new system of bus and underground lines temporarily led to a collapse of public transport due to inaccurate planning and coordination and caused mass protests for years. Aylwin stated:

We have to remember the Transantiago , because it was an intellectual construct, but when it was implemented things worked in a different way than those ‘experts’ thought. 98

June 2014: Bachelet Announces “Short Agenda” on Education

On June 26, 2014, president Bachelet and minister Eyzaguirre presented a “short agenda” for the educational sector with the objective of bringing some order to the debate, something that had become difﬁ cult due to increased criticism from all sides.99 The “short agenda” aimed to grant approximately US$35 million (CLP 20,000 million) to municipalities to strengthen public education before ending the municipal administration of schools.100 In addition, the measure aimed to alleviate “the multi-million-debt mountain” of the municipalities and to “improve the

97 L. Veloso: Eyzaguirre por reforma: Pido calma, si no es posible que se transforme en un nuevo Transantiago. In: Biobiochile, May 26, 2014, http://www.biobiochile.cl/2014/05/26/eyzaguirre- por-reforma-pido-calma-si-no-es-posible-que-se-transforme-en-un-nuevo-transantiago.shtml . Translation from Spanish by the authors. 98 Ibid. 99 The most important issues and debate procedures of the educational reform have been published by the Chilean government at its ofﬁ cial site in July 2014: http://reformaeducacional.gob.cl/participacion/plan-nacional-de-participacion/ and http://reformaeducacional.gob.cl/participacion/wp- content/uploads/documento_base_dialogos.pdf . 100 E. Tauran: Bachelet anuncia “agenda corta” para fortalecer la educación pública previo a la desmunicipalización. In: Biobiochile, June 26, 2014, http://www.biobiochile.cl/2014/06/26/ bachelet-anuncia-agenda-para-fortalecer-la-educacion-publica-previo-a-la-desmunicipalizacion. shtml . Translation from Spanish by the authors. 182 R. Benedikter et al.

physical and digital infrastructure” on the ground.101 Minister Eyzaguirre commented on the agenda, which was presented as “transition to the end of municipal school administration,” saying:

It is a powerful program. But we have to say clearly, it is not the deﬁ nitive solution, because the deﬁ nitive solution will take more time and is related to the envisaged end of municipal administration planned by the president.102 Bachelet added that the government was trying to make progress in the construction of a new “inclusive system of excellence,” which would be a “complex task taking years”:

Let it be said clearly: we will do the reform over the long-term for a free education of good quality. But we have to complement it with a short-term agenda, because neither the students nor the families can wait much longer for powerful measures that immediately impact the quality of education in the classroom.103 After the announcement of these ﬁ rst concrete measures of reform criticism rained down on Eyzaguirre from all political actors because of

The lack of dialogue with parties and parliamentarians, the exclusion of the New Majority [as an alliance] from decision-making, the implementation of a highly contested method of reform and the sequence of projects that have been sent to Congress. 104 The biggest preoccupation, however, was the “friendly ﬁ re” from Eyzaguirre’s own ranks, especially from the party Demócrata Christiana (DC). In consequence, according to El Mostrador Bachelet silently nominated Andrés Palma, a dissident from the executive board of the DC led by Ignacio Walker, in the Ministry of Education as “sub-secretary in the shadow.” This move has been read as a sign of silent confrontation between the president and the leadership of the allied DC105 :

The arrival of Palma in the Ministry of Education occurred formally in the function of Executive Secretary of the reform. That basically means that he will coordinate the team of the Ministry, although the true aspiration of La Moneda [i.e. the presidential palace of Chile] is assumingly the responsibility for the ‘political articulation’ of the reform. Palma’s task obviously is to initiate the second phase of reform by overcoming the criticism… about ‘communicational problems’ and the ‘lack of clarity’ when referring to the most important problems of the initiative. That is why from now on meetings of the Ministry with single parties will intensify…106

101 Ibid. 102 Ibid. 103 Ibid. 104 M. Jimenéz: Las claves de la llegada de Andrés Palma al Mineduc y la operación para neutralizar a Walker. In: El Mostrador, July 2, 2014, http://www.elmostrador.cl/pais/2014/07/02/las- claves-de-la-llegada-de-andres-palma-al-mineduc-y-la-operacion-para-neutralizar-a-walker/ . Translation from Spanish by the authors. 105 Ibid. 106 Ibid. 7 The Educational Dimension: Michelle Bachelet II’s… 183

Conclusion: Education as a Crucial Long-Term Challenge of Chile—With Open Results

What can be deduced from all this? Similar to the envisaged tax reform, the future of the educational reform in Chile remains (almost necessarily) unclear. The ongoing, nonscheduled incorporation of new players into the educational team of the Ministry raises the question of whether this will speed up the course of reform or will lead to further modiﬁ cations of the reform from the inside, thus avoiding that changes in design appear as an exogenous element and transforming the apparent weaknesses of the proposal into a strength for the dialogical incorporation of different political actors. However, Chile’s students and teachers continue to mobilize on the streets. The reform proposal of June 2014, for example, provoked marches of 80,000 people (students’ version) or 15,000 people (police version).107 Most worrying is the trend towards new “wars” on the streets as the growing violence, police repression (tear gas, water cannons, weapons), and the radicalization of segregated ideological groups in the ﬁ rst half of 2014 indicate. 108 On July 24, 2014, Merco Press reported bomb attacks and arson in Santiago allegedly carried out by Chilean anarchists.109 These accompanying symptoms indicate that the question whether Chile with its envisaged educational reform and other innovations may become a role model for the region will be answered only years from now, if at all. Or as Kevin Rolwing and Nick Clark provocatively summarize:

Beginning in 2011, student-led protests have ensured that education policy is today front and center on the political agenda. Promises of education reform have been central to the… presidential campaign of Chile’s […] president Michelle Bachelet. Her […] return to power […] follows four years of right wing, laissez-faire leadership that proved incredibly unpopular with student leaders. Students are demanding an end to tuition fees, increased public funding, improvement of quality standards, and the elimination of profi teering within higher education. The student movement has become so powerful that former student leaders have been able to parlay their political capital by running for national offi ce, none more popular than recently elected Communist Party Deputy Camila Vallejo who has lent leftist credibility to the Bachelet campaign (and perhaps herself) by aligning with Bachelet’s Nueva Mayoria (New Majority) coalition. […] Whether or not (the) new left-leaning Bachelet [II] government can respond to calls for reform from rectors and student leaders, after two decades of neoliberal infl uence on the nation’s institutions of higher education,

107 Merco Press: Thousands of Chilean students take the streets to protest education reform proposal, June 10, 2014, http://en.mercopress.com/2014/07/24/chilean-anarchists-in-arson-and-bomb- attacks-in-santiago . 108 The Guardian: Student protest in Santiago: Chile in pictures, June 11, 2014, http://www.theguardian.com/world/gallery/2014/jun/11/student-protest-in-santiago-chile-in-pictures . Cf. Intellihub - Civilian Intelligence Agency: Students faced tear gas and water cannons in Chile protest, June 12, 2014, http://www.intellihub.com/students-faced-tear-gas-water-cannons-chile- protest/ . 109 Merco Press: Chilean anarchists in arson and bomb attacks in Santiago, July 24, 2014, http:// en.mercopress.com/2014/07/24/chilean-anarchists-in-arson-and-bomb-attacks-in-santiago . 184 R. Benedikter et al.

remains to be seen. During the political campaign, Bachelet promised universal access to higher education, the abolition of tuition fees, as well as the elimination of for-proﬁ t universities. This would represent a signiﬁ cant about face from her previous tenure as president when she vigorously opposed student demands for free public universities. 110

Outlook: The Student Protest Movements in Chile and the USA and Their Underlying Educational Systems—Is a Constructive Comparison Possible?

In June 2014, Michelle Bachelet and Barack Obama agreed at their Washington summit that the educational issue, including access, equal chances, and future perspectives for the population at large in its full spectrum from kindergarten to post- academic, stands at the core of a larger need for reform of basic pillars of both nations, if not of the economic and fi nancial system created mainly by Western democracies throughout the past decades in the broader sense. Obama and Bachelet vowed to cooperate in trying to understand their student protest movements in order to improve the measures to fi nd solutions for the underlying principal problems of the respective educational systems, which seem not to be of an occasional, but of a structural nature. In an age where “U.S.-Chilean trade relations are booming,”111 as US ambassador Mariano Fernández rightly put it in 2008, and where education has become a core issue of exchange and cooperation, both Bachelet and Obama seemed to depart from the assumption that if international experts like Larry Birns, the director of the Council on Hemispheric Affairs, a liberal think tank on inter- American relationships in Washington, DC, consider the Chilean-US relationship still a “friendly, but totally unexamined relation” 112 which is “more built on style than on substance,”113 the educational issue could be a good fi eld for starting to deepen and refl ect on this partnership since the educational fi eld in particular is of similar importance in both countries. The resulting twofold question is: What can be learned by Chile from the US experience with student protest movements and the underlying problems of the socioeconomic system? And is there anything that in turn can be learned by the USA from the current Chilean efforts towards reform? The most apparent similarity within the confl ict geography of the “No to profi t” movement in Chile and the “We are the 99 %” movement in the USA is probably the combination of personally felt economic pressure mainly linked to high rates of

110 K. Rolwing and N. Clark: Higher Education in Chile, loc cit. 111 M. Fernández: Mariano Fernández, Ambassador of Chile to the United States, speaks with GDTV on Latin America, loc cit. 112 BizAsiaAmerica/CCTV: Larry Birns talks US-Chile Relations. In: YouTube, June 5, 2013, https://www.youtube.com/watch?v=D4R9iTMAQxc . 113 Ibid. 7 The Educational Dimension: Michelle Bachelet II’s… 185 indebtedness, the questioning of the ﬁ nancial system due to the perception of exaggerated power concentration, and the appeal for renewal of the political participation process.114 Peter Mörtenbeck and Helge Mooshammer have delivered a tentative description of the identity of the US protest movement, which at the same time renders some basic traits of Chile’s social protest movement, both originating in or co-stemming from the respective students protest movements:

The central motif for participation—especially among the well-educated, younger generation of U.S. citizens—is not the rejection of the capital system per se, but rather the frustration about the individual exclusion from the American Dream of prosperity to be achieved by good performance despite intense efforts. ‘The one thing that the [U.S.] protesters all seem to agree on is that the middle class way of life is moving out of reach (Sarah van Gelder)’.115 On the Tumblr-blog We are the 99 Percent —one of the main communication platforms of the US movement—one post indeed was considered particularly telling by many readers:

I worked hard, played by the rules, got good grades, never got in trouble…and I’m scared for my future. I have a Masters degree…why can’t I get a job??? I am 24 years old. I have US$100,000 in student debt (and growing). I have a Masters Degree, but no one will hire me. I am either over qualiﬁ ed or don’t have enough experience… How can you get experience if no one will give it to you? I live with my boyfriend who is barely paying our bills. […] I will be kicked off my father’s health insurance soon. When that happens I hope I don’t get pregnant from lack of birth control since we won’t be able to afford it. […] Sometimes I get physically sick from anxiety. I am terriﬁ ed about the future. I am the 99 %.116 Thus, the potential point of intersection between the movements, backgrounds and biographies of students in Chile and the U.S. may be the experience of growing mistrust in the future within a debt-centered economy which pervades ever more spheres of life (i.e. housing, education, health) and which “shifts the creation of money in ever more sophisticated and time projected dependencies”.117 On the occasion of a public meeting with former student leader Giorgio Jackson on November 30, 2012, in Berlin hosted by El Cultrún — Encounters between two worlds , the authors had the opportunity to ask Jackson if there is any link between the two student protest movements in Chile and the USA. He replied:

No, there is no direct link, except for the fact that both movements are ﬁ ghting against economic injustices and for more political participation.118

114 P. Mörtenbeck and H. Mooshammer: Occupy: Spaces of Protest [Occupy: Räume des Protests], loc cit., p. 28. 115 Ibid. Translation from German by the authors. 116 Tumblr-blog We are the 99 Percent , October 6, 2011, http://wearethe99percent.tumblr.com/ post/11122269063/i-worked-hard-played-rules-got-good . 117 P. Mörtenbeck and H. Mooshammer: Occupy: Spaces of protest, loc cit., p. 26. Translation from German by the authors. 118 G. Jackson, transcript by the authors. 186 R. Benedikter et al.

In face of the historical background this statement seems in some ways paradoxical though. On the one hand it was the US-based Chicago School and their promotion of the logics of the Free Market that created both the base of global fi nancial capitalism (i.e., the main “target” of the Occupy movement) and Chile’s neoliberal educational system criticized by the Chilean students. On the other hand, as stated by Jackson, the difference between the movements in North and South America is evident. In comparison to the ad hoc character of the spontaneous, leaderless and decentralized Occupy movement (which in some ways was probably one of the fi rst genuine global social protest movements of the twenty- fi rst century), Chile’s strictly national student protest movement has a long historical trajectory with a high rate of institutionalization of internal structures and a clear leadership. Furthermore, the Occupy movement did not propose an alternative concept of society through the simultaneous change of a vast variety of basic parameters, as Chile’s students did. The result was that while the Occupy movement remained outside the halls of power and a genuinely civil initiative, the Chilean student leaders became serious “counter-authorities” with some of them already having arrived in the leading institutions of the Chilean democracy as parliamentarians, i.e., Camila Vallejo, Giorgio Jackson, and Gabriel Boric. Nevertheless, despite all differences both protest movements share one decisive commonality: they have both shifted values in the respective populations, and they both have contributed to the creation of a new class-consciousness—although the difference again is that this consciousness is rather un-ideological in the USA, while it is partly ideological, partly even radically ideological in some sectors in Chile. In the end, as it always is with social protest movements, including allegedly failed movements, only with historical distance can their full effects on political transformation be analyzed. The question to what extent Chile and the USA will be able to learn from each other’s successes and shortfalls in the educational realm and its systemic prerequisites as well as with regard to the resulting political effects will remain a hot topic throughout the coming years; and the answers to that question will without doubt shape the future of both nations. Fernando Reimers is right in affi rming that

The next decade of higher education in Latin America will have a very important inﬂ uence on the future of Latin America itself. It is in universities that most of the public and private leadership will be educated. It is in universities that many of the ideas about how to promote social, economic and political development will be shaped or re-shaped. 119 The challenge for Chile then, as for most other countries in the region, is to pass from resource deliverers to “knowledge economies” and to combate inequity through education. The prerequisite is the reform of education. As Chilean and US universities are further strengthening their ties, such as, for example, with the Chile- Harvard Partnership that celebrated its 10-year anniversary in November 2012,120

119 F. M. Reimers: Innovating Universities. In: ReVista. Harvard Review of Latin America, Fall 2012, http://revista.drclas.harvard.edu/publications/revistaonline/fall-2012 . 120 A. Powell: Chile-Harvard partnership strong. Seminar marks decade of Santiago ofﬁ ce, scholars program. In: Harvard Gazette, November 30, 2012, http://news.harvard.edu/gazette/story/2012/11/ chile-harvard-partnership-strong/ . 7 The Educational Dimension: Michelle Bachelet II’s… 187 the internationalization offensive begun by Chile in 2008 when the government Bachelet I set aside US$6 billion for Chileans to earn graduate degrees in foreign countries,121 and a quality offensive by upscaling the third phase (2012–2016) of its “Higher Education Quality Improvement Program” (Program MECESUP)122 with international help, the relations between the Chilean and the US educational systems are likely to intensify over the coming years. Or as Ned Strong, the Executive Director of Harvard’s David Rockefeller Center for Latin American Studies (DRCLAS) and expert on Chile, who recently led an international conference on the last three decades of development of Higher Education in Latin America,123 put it:

In Latin America, Chile is emerging as a leader in academic exchanges and collaborations. In addition to a growing portfolio of traditional student and faculty exchange, Chile has a strong university system, a notable ease of doing business, emerging fi nancial resources, and an environment that encourages innovation. 124 There is no doubt that this will further develop Chile-US university and higher education cooperation. The question is who will benefi t from the respective exchange, and if both partners will be taking their different, but in some ways similar, experiences equally seriously. In the end, Chile today is undertaking sustained, if embattled and diffi cult attempts to reform its educational system from scratch in order to change young people’s perspectives, not least by cooperating with the best of the West. In comparison, what has Obama done to make US higher education more accessible and to manage the fi nancial problems of American students, including in particular their rapidly growing structural indebtedness?

121 The Chronicle of Higher Education: Chile, August 31, 2014, http://chronicle.com/academicDes- tination/Chile/23/ . 122 Ministerio de Educación, Gobierno de Chile: MECESUP, http://www.mecesup.cl/ . 123 Pontiﬁ ca Universidad Católica de Chile: Ned Strong dictará conferencia plenaria sobre las tres décadas de desarrollo de la Educación Superioer en América Latina. Summit internacional: Educación al servicio de la sociedad, 12 al 16 Enero 2015, http://www.summit.uc.cl/index.php/ noticias/30-ned-strong-y-el-desarrollo-de-la-educacion-superior . 124 N. Strong: US-Chilean University Partnerships. In: Global Perspectives on Higher Education: Global Opportunities and Challenges for Higher Education Leaders 2014, pp. 235-238, http://link. springer.com/chapter/10.1007/978-94-6209-863-3_51 . Chapter 8 Conclusion and Outlook: Chile, Quo Vadis? Chile’s Additional Five Future Issues to Address. A Chance for Progress

Roland Benedikter and Katja Siepmann

Analyzing the phenomena that characterize current Chile, and taking note of its outstanding, multidimensional transition of the present (both factual and envisioned), there can be no doubt that the Andean nation today is one of the global societies worth studying with the most intense interest and dedication.

A Nation to Study with Greatest Interest

In our view, this southernmost state of Latin America is currently one of the most intriguing cases for a classical “nation study”, because it is changing unusually many parameters of its basic societal arrangement at the same time, while simultaneously functioning as a stable, well-established, and in many ways admired OECD member. That makes it a paradigm of voluntary transition in our times in the most advanced stratum of international development, and at its highest levels. If it is correct that, as experts such as, for example, Anton Pelinka of Central European University states, “we need more, more interdisciplinary and more encompassing nation studies”,1 and if such “country studies” (as the Americans prefer to call them) must follow the goal

to provide a basic understanding of the observed society, striving for a dynamic rather than a static portrayal. Particular attention [must be] devoted to the people who make up the

1 A. Pelinka in conversation with Roland Benedikter, May 5, 2000. Notes in the archive of the author. R. Benedikter (*) University of California , Santa Barbara , CA , USA e-mail: [email protected] K. Siepmann Opina Market Research Institute , Santiago , Chile e-mail: [email protected]

society, their origins, dominant beliefs and values, their common interests and the issues on which they are divided, the nature and extent of their involvement with national institutions, and their attitudes toward each other and toward their social system and political order,2 then this is particularly the case with regard to a modern nation like Chile that envisages changing its basics profoundly, and in a relatively short period of time. In fact, Chile as a political and societal microcosm is both unique in and highly interconnected with the international community. Its size is unexceptional and thus graspable; and its social and cultural complexity is representative of a “post-formal”3 socio-psychological constellation. Thus, it presents a collective psychology that transcends traditional patterns and refl ects upon itself more than usual (including a refl ection upon its own refl ection) in order to create new patterns, which affects all three fi elds of economics, culture, and politics. Furthermore, Chile’s relationships with global players in politics, economics, and education, such as the U.S., Europe, and China, are equally excellent on all sides; and its geopolitical position as “one of the longest and narrowest nations in the world, deriving its name from the indigenous Mapuche word ‘Chilli,’ which may mean ‘where the land ends’”,4 remains noteworthy in comparison to other players of similar size and modernization level even in times of omnipresent real- time internet connectivity. Its efforts to renew its taxation and educational systems are widely unparalleled; and its dedication to become a “better democracy” and its strive for “good governance” are exceptionally motivated. But the most important feature is that Chile today is a nation in the midst of one of those rare historical moments where many, maybe all, crucial parameters defi n- ing a modern nation are changing at the same time : economics, culture, politics, civil religion, education, the social, as well as international relations and embed- ment into the given and emerging global order. Again, this change is both desired and occurring and is an evolution that can hardly be arrested by political interests or ideologies. It is the relationship between 1. The laws of change in place 2. The will of the people and 3. The actions of the government that make Chile’s present transition phase so appealing and fascinating. All these together make Chile a particularly attractive case to observe from the viewpoint of a contemporary interdisciplinary political analysis, and in particular of

2 R. L. Mortimer: Chile: Foreword. In: R. A. Hudson (ed.): Chile: A country study. Federal Research Division, Library of Congress, Washington DC 1994, http://lcweb2.loc.gov/frd/cs/cltoc. html . 3 J. L. Kincheloe and S. R. Steinberg: A Tentative Description of Post-Formal Thinking. In: Harvard Educational Review, Vol. 63, No. 3, Fall 1993, pp. 296-320. Cf. M. Lamport Commons and S. N. Ross: What Postformal Thought Is, And Why It Matters. In: World Futures, Vol. 64/2008, pp. 321-329, http://moodle.unitec.ac.nz/fi le.php/950/Day_12_Young_adulthood/Stages_of_Post_ Formal_Thought.pdf . 4 R. A. Hudson: Chile: Introduction. In: R. A. Hudson (ed.): Chile: A country study, loc cit., http:// lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@fi eld%28DOCID+cl0012%29 . 8 Conclusion and Outlook: Chile, Quo Vadis?… 191 a contextual political analysis,5 to be closely followed up in the years ahead. This is especially the case if the country’s efforts are seen as a case study towards some guiding principles for a series of other developed countries in the near future for which permanent change will become the norm and crisis the new everyday experience. In other words: Chile, as a microcosm with its own laws, socio-political habits, and myths, can serve as an observatory to anticipate complex developments in other modernizing and democratizing nations. It is in many ways a laboratory of a society confronting complexly interrelated transitions on all crucial social fi elds against all odds with attempted bipartisan compromises, bravery, and innovative drive, and— as it is unavoidable—not without problems and shortfalls. As sure as it is that every condensed nation study such as the one presented in this book can only capture a temporary frame of such an accentuated and multidimensional transition, so safe is it to bet that most Chilean developments of the coming decade will be the result of the key trajectories and trends described by its government, and analysed here.

The Era of Bachelet II (2014–2018): Towards a “New Historical Cycle”?

The government Bachelet II seems to be well aware that such a constellation with a transition of that outreach needs increased efforts of communication and dialogue to secure governability. In order to properly design the envisaged transition, the Chilean government started a social media campaign at the end of June 20146 encouraging citizens to participate in the process of implementation of reforms by attending rounds of public dialogue and presentations by the government, social organizations of both conservative and leftist inclination, educational institutions, and other important actors in the public sphere. 7 According to the governmental homepage, greater public participation in decision-making is one of the main targets of Chile’s envisaged “new historical cycle”:

The country is prepared for entering a new political, economical, and social cycle in which the Chilean people will be the protagonists. In order to look with conﬁ dence to the future— where we should tackle inequality—we need a program that is able to realize the necessary transformations with the help of governability. 8

5 R. E. Goodin and C. Tilly (eds.): The Oxford Handbook of Contextual Political Analysis, loc cit. 6 Youtube: Plan Nacional de Participación Ciudana para la Reforma Educacional, uploaded on July 17, 2014, https://www.youtube.com/watch?v=jT8Vk0zNWUQ . 7 Ministero de Educación, Gobierno de Chile: Ministro Eyzaguirre puso en marcha Plan Nacional de Participación Ciudadana para reforma educacional, July 17, 2014, http://www.mineduc.cl/con- tenido_int.php?id_contenido=29055&id_portal=1&id_seccion=10 . 8 Gobierno de Chile: Programa de gobierno 2014-2018, http://www.gob.cl/programa-de-gobierno/ . Translation from Spanish by the authors. 192 R. Benedikter and K. Siepmann

Considering the proposals of reform of Bachelet II, there are fi ve main issues that can be identifi ed as those which will strongly impact the governability of transformation towards Chile’s envisaged future—a future that may signify the end of the (classical) neoliberal era in Latin America’s most successful nation, and a start toward a more pondered social agreement. It has to be hoped that such a trajectory does not indicate a shift back to “socialist” or even “communist” logics or the protected economy of the 1960s and 1970s, but rather will tend towards potential further development of Chile’s liberal model through a better combination of a free market with social and environmental innovations appropriate to face the global challenges of the twenty-fi rst century. In our view, Chile’s fi ve main future issues are: 1. Democracy and new media, including the “politics of the Internet” 2. Foreign policy, new strategic alliances, and participation in global governance 3. Sustainable approaches to resources and energy 4. Global climate change and multi-dimensional, interconnected care of the environment 5. Resilience, security, and peace politics In our view, these fi ve topics and their—transitory and changing—interrelation will not only infl uence Chile’s transition into a potential post-neoliberal era, but will also impact the general development of the international community. Interestingly, as early as 1995 Juan Gabriel Valdés, a Chilean politician, diplomat, and foreign minister under the government of Eduardo Frei (1994–2000), pointed to the distinguished model character in foresight and anticipation of the Chilean society:

In Latin America, Chile anticipated by over ten years the stabilization, adjustment, and liberalization processes that are now a generalized feature of the continent. More remarkable still is that the ultra-liberal reforms of Chile came before analogous change in the United States and the United Kingdom. With a sense of anticipation that may perplex those who regard the developing world as mechanically dependent on events taking place in the central [democratic] nations, Chilean economists appeared to foresee the ﬁ nal shift in the Keynesian era, as well as the rise to prominence of monetarist policies aimed at correcting the monetary imbalance […] Their policies anticipated a fashion—ﬁ nancial abundance, assaults on the state, the denigration of government intervention, the celebration of rapid enrichment, the ‘yuppie’-boom, and […] disregard for social policies—a fad that some neoliberal intellectuals and […] economists felt would distinguish Western ‘modernity’ in the closing years of the century. […] Today, issues of neo-liberalism and a market-regulated society are matters of universal concern. Interest in the Chilean case no longer derives from its peculiarity, but because it contained elements of neo-liberal logic at its most extreme and paradigmatic. Many of the matters originally present in the Chilean process have reap- peared in each of the subsequent neo-liberal experiences. For this reason, discussion of the Chilean case actually alludes in great measure to universal problems and ideological currents.9 Valdés is right in pointing out the exemplary value of Chile’s case and its teachings for other, upcoming “post-neoliberal” societies in transition.

9 J. G. Valdés: Pinochet’s economists: The Chicago School in Chile, Cambridge University Press 1995, pp. 3-5. 8 Conclusion and Outlook: Chile, Quo Vadis?… 193

Overall, the most interesting future issue is probably the question of whether Chile in the coming years will revive its “model role” as a laboratory for avant-garde societal projects by becoming the ﬁ rst OECD member renovating (almost) all societal spheres simultaneously—or if the ambitious programs of Bachelet II will remain incomplete, or even fail. Irrespective of the answer, one aspect seems sure: the international interest in the Chilean case will continue to rise. And there will be ﬁ ve issues of particular interest, as we propose.

Issue 1: Democracy and New Media, Including the “Politics of the Internet”

As the current Chilean case of transition confi rms in many ways and from different viewpoints, social movements seem to have regained power and are “writing history” again. In comparison with former social movements, however, Chile’s student protest movement from 2006 onwards constituted one of the fi rst longer-lasting examples of so-called smart grassroots movements that combined new means of technology (Blogs, Information) with networking (Facebook, Twitter) and traditional group-building logics, thus achieving the mobilization of thousands of citizens via social media tools. In such a way, Chile’s student protest movement has become an exemplary testi- mony of the strong impact of social media as a driving force of political change in well-targeted and precisely confi ned areas. This example confi rms the new essential role of “politics of (and on) the Internet”, which are globally on the rise and will probably build the bridge between the classical spheres of “governmental politics” and “street politics” in the years ahead. On the path towards a more genuine citizen’s democracy and a socio-political “practice committed to dialogue, the common good and a culture of peace”, 10 as many desire, Chile—like other potential “post-neoliberal” nations—will face new opportunities and challenges. In a publication of the Regional Project of Political Analysis and Prospective Scenarios (PAPEP) of the Regional Bureau of Latin America and the Caribbean (RBLAC) of the United Nations Development Programme (UNDP) and The Latin American Confl ict Analysis Unit of Fundación UNIR Bolivia, the authors around editor Felipe Calderón made the following diagnosis with regard to the shift of political confl ict in Latin America into the media landscape and the Internet:

There is a notable trend in the region to increasingly transmit conﬂ icts through mass media, including via traditional media (television, radio, newspapers) and new means of communication (internet and cell phones). Media companies are sources of power that create

10 F. Calderón (ed.) for UNDP and UNIR: Understanding Social Conﬂ ict in Latin America, United Nations Development Programme and Fundación UNIR Bolivia 2013, http://www.undp.org/content/undp/en/home/librarypage/crisis-prevention-and-recovery/Understanding-Social-Conﬂ ict-in- Latin-America/ , p. 8. 194 R. Benedikter and K. Siepmann

common concepts of confl ict by shaping public opinion and the meanings of confl ict. The media needs confl ict, and confl icts need the media. The media are comprised largely of businesses which depend on the market and respond to the interaction of interests and pressures specifi c actors. Media companies are never neutral, nor are they just mechanical instruments of power. There is a dialectic between media and society. In the framework of confl icts, a complementary relationship is established between the media and the actors of confl ict. However from a constructivist perspective, the media also fabricate social reality, actively portraying narratives and views that infl uence the political system, decision- making processes, and the actions of social actors.11 In accordance with this diagnosis, Chilean investigative media Latinobarómetro ’s study “Informe 2013”, a macro-study on the present of the South American continent, testifi ed Chile’s leading position in the area regarding social media usage and technology. For example, in Latin America the use of Facebook has generally dou- bled over recent years (2010: 19 %; 2013: 38 %), and Chile had the largest group of users on the continent with 51 % of its citizens in 2013 (Argentina 50 %, Costa Rica 48 %).12 Furthermore, today at least 85 % of South America’s and 84 % of Central America’s population own a mobile phone. Due to the continuing proliferation of smartphones, Latinobarómetro expects a bridging of the digital gap with the most evolved Western democracies in a rather short-term perspective.13 Chile’s government seems to be prepared for these new digital times of politics. The governmental homepage has embedded most established social media tools such as Facebook, Twitter, Flickr, and Youtube to distribute information and to increase citizens’ participation. Chile’s authorities are unmistakably trying to use the new tools to listen to what citizens have to say, to exchange opinions, and to positively foster the transformative potential of social confl ict, as well as to develop new mechanisms to translate public opinion and decision-making into concrete political decisions. According to PAPEP and UNIR, the globalization and digitali- zation of communications across the region involves fi v e trends, which in our view are valid in particular for Chile:

The ﬁ rst [trend] involves the relationship between the growth of media and the multiplication of expectations. Today’s masses form their demands based on greater information about what the markets offer and a heightened awareness of the disparities and social injustices that exist in the region. The second [trend] refers to the changes produced by political mediation. New actors, such as media communicators, publicists, and non-governmental organizations, are decisive elements in the new order of communicational politics. A third trend refers to a new discourse in the media which disseminates values associated with democracy and the free market. The fourth trend relates to the new relationship between power and press in the region. Assessed from a progressive perspective, the new media oligopolies have an enormous inﬂ uence. They administer the intersection between politicians and the public. On the other hand, a more institutionalist

11 Ibid., p. 12. 12 Cooperación Latinobarómetro: Informe Latinobarómetro 2013, Santiago de Chile, 1 de Noviembre 2013, http://www.latinobarometro.org/documentos/LATBD_INFORME_LB_2013. pdf , p. 85. 13 Ibid. 8 Conclusion and Outlook: Chile, Quo Vadis?… 195

view questions the growth of media power and the pretensions of media neutrality that escape the control mechanisms and institutional norms that apply to society as a whole. Finally [fi fth ], at the same time that communications media companies have grown more powerful, there has been a democratizing trend in communications. New media (especially the internet) offer a more direct and proactive access to global communication. Individuals have increasing space and opportunity to produce information and directly contribute to the creation of narratives and collective perspectives. A broader variety of actors now participate in redefi ning, differentiating, and homogenizing collective notions and perspectives of society. In this context of reconfi gured public space, there is growing independence from traditional party systems, and personal perspectives have more weight. Visual aesthetics and public opinion polls are the new political instruments of a relatively new system of governance that could replace or complement representative democracy in… [a] ‘democracy of the public sphere’.14 All this is certainly valid for contemporary Chile. As shown in the analysis of Chile’s competing narratives in Chap. 2, the country today can serve as an example for studying the emergence and multiplication of new “cultural narratives” and their “contextual” infl uence on political and societal change. Social media tracking and weekly public opinion polls have already achieved a key role in the political process in Chile. In addition, the internet plays a crucial role in the emergence of an unparalleled variety of “bottom-up” identity narratives by allowing people to share their own comments about events and public actors, and thus by a strongly individualized “storytelling” that is changing the hierarchies of information and [founding] national mythology not only in factual, but sometimes also in fi ctional ways. This is, for example, the case when people feel empowered to share their own versions of events, alleged backgrounds and meanings, or to reveal knowledge about persons or groups in public ways through channels formerly unknown, and certainly not available during the Pinochet dictatorship (1973–1990). This development certainly confi rms that in today’s Chile the times of dictator Pinochet are over also in the realm of information and personally exchanged and shared knowledge. It may be a historical sidenote that not by chance Pinochet, who during his reign relied heavily on the control of media and bookselling, was himself a passionate reader and, as the New York Times recently reported, “secretly used public funds to [personally] amass some 50,000 books during his time in power, leaving some to puzzle over the motivation for his obsession.”15 But while Pinochet was mostly reading about Napoleon and was not much interested in contemporary issues and future projections, in Chile’s current media landscape things seem to have turned upside down.

14 UNDP and UNIR: Understanding Social Conﬂ ict in Latin America, loc cit., pp. 12-13. 15 S. Romero: A Chilean Dictator’s Secret Book Collection: Heavy on Napoleon, Light on Fiction. In: The New York Times, January 10, 2014, p. A6, http://www.nytimes.com/2014/01/10/world/ americas/a-chilean-dictators-secret-book-collection-heavy-on-napoleon-light-on-fiction. html?_r=0 . 196 R. Benedikter and K. Siepmann

Nevertheless, it remains to be seen which new political mechanisms, including a potential new governmental system, will emerge from the country’s reconﬁ gured public (including at its forefront digital) space. All respective predictions must be over-proportionally cautious, because Chile’s history teaches that things in the Andean nation can change fast—and it is unlikely that electronic communication will be the exemption here.

Issue 2: Foreign Policy, New Strategic Alliances, and Participation in Global Governance

On the occasion of Barack Obama’s bilateral meeting with former Chilean president Sebastián Piñera in the White House on 4 June 2013, Obama stated that as a consequence of economic success and democratization

Chile has become not only a leader in the hemisphere, but also a leader in the world.16 Without doubt, Obama is internationally known for exaggerated rhetoric that is not always coherent with his real beliefs and subsequent deeds. Nevertheless, this statement of a U.S. president is important as it underscores Chile’s outstanding role in South America’s constellation when it comes to foreign policy. But despite its economic success and high interconnectivity, and although Chile’s foreign policy has been successful in areas such as building extraordinarily effective ties with the U.S., Europe, and China, it has also recently suffered some setbacks. In January 2014,

A six-year maritime dispute between Chile and Peru was settled […] when the International Court of Justice in The Hague ruled largely in favor of Peru, stripping Chile of economic rights over a swath of the Pacifi c Ocean. Off the coast of Arica, a city on the border with Peru, the court set the boundary at 80 miles. Beyond that, it drew a diagonal line southwest, slicing about 8,000 square miles of ocean from Chile’s ‘exclusive economic zone.’ Although the decision, which cannot be appealed, was considered more likely to affect industrial fi shing, hundreds of Arica [a city in Northern Chile, author’s note] fi shermen and residents marched through the city waving black fl ags and Chilean fl ags, complaining about the loss of access to resources beyond the 80-mile point. Local fi shing associations had already said they would seek compensation from the Chilean government if the ruling deprived them of their livelihood. Chile lost special rights to marine resources in about 8,000 square miles of ocean near its northern border, but retained control over its 12-mile territorial waters, where most small-scale fi shing activity takes place. The president of Peru, Ollanta Humala, said the ruling granted Peru most of what it had wanted. […] ‘We still don’t understand the arguments of the court for reducing the extension of the parallel,’ said Mario Artaza, a former [Chilean] Foreign Ministry offi cial and diplomat. ‘However, Chile lost relatively little compared to what Peru was demanding.’ The ruling, Mr. Artaza added, ‘offers the opportunity to begin a new stage in our relationship.’ 17

16 Youtube: Obama’s Bilateral Meeting with President Sebastián Piñera of Chile, June 4, 2013, https://www.youtube.com/watch?v=9pJYoYjijNE. 17 P. Bonnefoy: Court Grants Peru Ocean Territory Claimed by Chile. In: The New York Times, January 27, 2014, http://www.nytimes.com/2014/01/28/world/americas/court-grants-peru-ocean- territory-claimed-by-chile.html . 8 Conclusion and Outlook: Chile, Quo Vadis?… 197

D e ﬁ ant of such apparent “defeats” on the international stage, Chile’s foreign policy is rapidly increasing in international importance.18 In the almost 300 pages of the memoir of former president Sebastián Piñera (2010–2014), the author rightly anticipates a new future role of the country with regard to international affairs:

Perhaps as never before Chile has everything to be fully integrated into the world. Indeed, if two thousand years ago the center of the world was in the Mediterranean and until a few decades ago in the Atlantic Ocean, nobody doubts that the center is moving rapidly towards the Pacifi c Rim, whose waters bathe not only three thousand miles of our shores, but also several of the major economic powers such as the U.S., China, Japan, Hong Kong, Singapore, Taiwan, Canada, Australia and New Zealand. In other words, we are no longer located at the end of the world in the fi nis terrae, but we enjoy a prime strategic location in this new world order—both political and economic, scientifi c, technological and cultural. […] Today Latin America is a region that plays a role and has a relative weight in a world that is very different from before. It no longer feels part of the problem, but rather of the solution. And it sees itself as a strategic partner for other development poles in order to face the multipolar world that we expect for the coming decades. 19 Although Piñera’s statement is quite enthusiastic, it has its strong points. Fact is that global problems such as the world food and fi nancial crises, the scar- city of resources, and the growing insecurity of energy supply challenge the existing international system, exert pressure on established multilateral institutions, and foster the creation of new strategic alliances. Not least due to the rise of emerging powers such as the BRICS-states (i.e. Brazil, Russia, India, China, and South Africa), a trend towards fragmentation in global policy-making can be observed. Processes towards a polycentric world are not only linked to the rise of the BRICS, but also relate to the recent development of the Next Eleven or “N-11” 20 (i.e. Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, Turkey, South Korea, and Vietnam), which are highly populous countries that could witness economic upturns similar to those of China or India. Based on variables such as macroeconomic stability, political maturation, openness and internationalization of trade, as well as the general outlook for investment and growth, the N-11 have a high potential to become—along with the BRICS—one of the world’s largest economic spaces of the twenty-fi rst century, according to Jim O’Neill from investment bank Goldman Sachs.21 But what has Chile to do with all this?

18 J. Ensignia et al: (ed.s): Política exterior en el Chile: Quo vadis? Friedrich Ebert Foundation, Santiago de Chile 2011, http://library.fes.de/pdf-ﬁ les/bueros/chile/07959.pdf . 19 Gobierno de Chile: Memoria Internacional Presidente Sebastián Piñera E. 2010-2014, Fyrma Gráﬁ ca, Santiago de Chile 2014, pp. 14-15 and p. 27, http://www.sebastianpinera.cl/presidente/ memoria-internacional. The English version contained in the book has been slightly corrected by the authors. 20 J. O’Neill for Goldman Sachs: N-11 Advisor Brochure, http://www.goldmansachs.com/gsam/ docs/funds_international/brochures_and_sales_aids/fund_literature/advisor_brochure_n-11_en. pdf . 21 O. Anudu: What makes Next Eleven Markets Tick? In: Businessday, November 14, 2013, http:// businessdayonline.com/2013/11/what-makes-next-eleven-markets-tick/#.U99SRxa5ns0 . 198 R. Benedikter and K. Siepmann

New Partnerships: And Chile’s Role in Them

As always in international relations (i.e. in the “politics that count”), the answer is complex: not clear-cut, but multi-valent and ambiguous. First, the gradual departure from former patterns of power politics and governance structures due to a “global systemic shift”22 is not only refl ected by the new self-confi dence and (direct and indirect) infl uence of the BRICS states on international policies, including on Chile which was a largely unique and thus also to a certain extent isolated case within the South American context. It is also embodied by the fast-changing transnational club models and coalitions of actors, which increasingly include non-governmental actors, horizontal networks, public-private joint ventureships, semi-private and private companies, NGO’s, foundations, and think tanks. According to former President Sebastián Piñera, Chile is an outstanding example of cooperation with the emerging powers and global integration:

On the economic and trade front, we have signed free trade agreements with Nicaragua, Vietnam, Thailand, Hong Kong, Malaysia, and Turkey, as well as new trade agreements with China, India, and the European Union. Thanks to those, Chile is now the second most open country in the world with free trade agreements with about 60 countries, which together account for 75% of the world’s GDP. In addition, we participated for the fi rst time in the G-20 Summit, which brings together the 20 largest economies in the world and substantially advances the Transpacifi c Partnership negotiations—the boldest process of integration carried out by the principal economies of both sides of the Pacifi c.23 Besides the global trend towards trans-regional economic blocks (including statal and non-statal actors), for example, the Trans-Pacifi c Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), there are also remarkable changes in regional strategic alliances in Latin America which will affect Chile in the coming years. It was Chile—the country which was not participating as a full member in Latin America’s main economic alliances “Southern Common Market” or MERCOSUR24 (Argentina, Brazil, Paraguay, Uruguay, Venezuela) and “The Andean Community of Nations” or CAN25 (Bolivia, Colombia, Ecuador, Peru)— that in recent years played an active and signifi cant role in the two most important regional processes of alliance-building. These are: 1. The process of integration of all 12 sovereign states of South America (Chile, Bolivia, Colombia, Ecuador, Peru, Argentina, Brazil, Paraguay, Uruguay, Venezuela, Guyana, and Suriname) into UNASUR, the “Union of South American Nations”/Unión de Naciones Suramericanas .26

22 B. Mazlish: Part and Wholes, loc cit. 23 Gobierno de Chile: Memoria Internacional Presidente Sebastián Piñera E. 2010-2014, loc. cit., p. 15. 24 MERCOSUR: Mercado Común del Sur/Southern Common Market: http://www.mercosur.int/ . 25 CAN: Comunidad Andina/Andean Community of Nations: http://www.comunidadandina.org/ ingles/who.htm . 26 UNASUR: Unión de Naciones Suramericanas/Union of South American Nations: http://www. unasursg.org/ . 8 Conclusion and Outlook: Chile, Quo Vadis?… 199

2. The process of integration of all 33 sovereign states of South America and the Caribbean into CELAC, the “Community of Latin American and Caribbean States”/Comunidad de Estados Latinoamericanos y Caribeños . 27

UNASUR: The Union of South American Nations

The Constitutive Treaty of UNASUR was signed on May 23, 2008 in Brasília, Brazil.28 Not by chance, Michelle Bachelet (during her ﬁ rst presidency) became the ﬁ rst president pro tempore (May 23, 2008–August 10, 2009) of the new transnational organization “in recognition of the country’s and Ms. Bachelet’s dedication to integration”,29 as Alejandro Foxley, former Chilean Foreign Affairs minister, commented. According to José Antonio Sanahuja, Chile’s motivation to support South America’s integration is the initiation of a “post-(neo)liberal regionalism” in the area:

For Chile, UNASUR could be a device to lessen the potential instability and conﬂ ict with Bolivia, to ease the complex bilateral relationship with Argentina, and help to solve its needs concerning energy security by working in a regional context. 30 The analytic question in this case would be what “post-(neo)liberal” would mean exactly in the given context. Although understandable compromises have been made in the relationship between “neoliberal” nations like Chile and “leftist” countries like Bolivia, and necessary steps have been taken towards overcoming radical neo-liberalism in the direction of a more mitigated and pondered liberalism, it remains a common conviction both within and outside the country that it would still be problematic for Chile to give up the “liberal” approach that has strengthened the nation so impressively throughout the past decades. According to the analysis of the NGO International Democracy Watch , the members of UNASUR

Announced the intention to model the new [Latin American] community [according to the example of] the European Union, including a common currency, parliament, and passport. According to Allan Wagner Tizón, former Secretary General of the Andean Community, a complete union like that of the EU should be possible by 2019. […] According to

27 CELAC: Comunidad de Estados Latinoamericanos y Caribeños/Community of Latin American and Caribbean States: http://celac.cubaminrex.cu/en . 28 International Democracy Watch: Union of South American Nations, http://www.internationaldemocracywatch.org/index.php/union-of-south-american-nations . 29 Mercopress: Chile’s Bachelet nominated Unasur’s ﬁ rst president, May 24, 2008, http://en.mercopress.com/2008/05/24/chile-s-bachelet-nominated-unasur-s-ﬁ rst-president . 30 J. A. Sanajuha: Post-liberal regionalism in South America: The case of UNASUR. European University Institute Working Paper, Robert Schuman Centre for Advanced Studies, Global Governance Programme 2012, p. 10, http://cadmus.eui.eu/handle/1814/20394 . 200 R. Benedikter and K. Siepmann

[a respective] Constitutive Treaty, the Union’s headquarters will be located in Quito, Ecuador. The South American Parliament will be located in Cochabamba, Bolivia, while the headquarters of its bank, the Bank of the South, will be located in Caracas, Venezuela.31 It seems to be no coincidence that the foundation stones of the headquarters of UNASUR were laid in Ciudad Mitad del Mundo/literally: “Middle of the Earth City” in Ecuador. This symbolic act seems an expression of the new self-awareness— and to a good part self-confi dence—of the continent, its growing infl uence on international affairs, as well as of its awareness of its new prime geopolitical position in the “Pacifi c Century” (Hillary Clinton32 ). But the goal to achieve a (more or less) functioning Latin American union by 2019 that might be “united in diversity”, such as the European Union motto states,33 is an ambitious target that—as a process—will most likely provide both opportunities and risks for the continent. Although it is obvious that, in opposition to some populist claims, Chile will be no Germany for South America, i.e. no “order power” due to sheer economic infl uence. On the contrary, Europe’s crisis may teach some lessons of how to steer an appropriate integration process, and how to build a proper “unity in diversity” in Latin America: no haste, but patience, with the goal of no new central “super-state”, but an alliance of free nations bound together by values, i.e. by more than just economy and welfare. That takes time and attention. To become a real union, UNASUR, like the EU, will have to – Avoid an overly accentuated difference in the progress of member-countries and non-members – Prevent the development towards winner- and loser-nations of a potential common currency (like that in the EU between the Northern and Southern countries of the Euro) – And address the issues of economic integration not asymmetrically, but on an equal level and pace to political, social, and cultural integration The question how a common civil religion, i.e. shared values, will be able to be developed (and then publicly deployed) despite different cultures and histories will also be crucial for the long-term success of the integration project, as the history of the European Union teaches.34

31 International Democracy Watch: Union of South American Nations, loc cit. 32 H. Rodham Clinton: America’s Pacifi c Century. In: Foreign Policy, October 11, 2011, http:// www.foreignpolicy.com/articles/2011/10/11/americas_pacifi c_century . 33 The European Union: The EU motto (2014). In: http://europa.eu/about-eu/basic-information/ symbols/motto/index_en.htm . 34 R. Benedikter: Europe cannot remain what it is. Lessons from Europe’s debt crisis: Governmental union, fi scal union and European civil religion. An attempt to gain an overall picture. With a foreword by Dr. Mathias Schäfer. Publication Series of the Konrad Adenauer Foundation: Social and Economic Governance Programme Asia, Japan Offi ce, Tokio 2013, http://www.kas.de/japan/en/ publications/36034/ and http://www.kas.de/wf/doc/kas_36034-1522-2-30.pdf?131118045118 . 8 Conclusion and Outlook: Chile, Quo Vadis?… 201

In any case, the global map seems to be changing not only due to the conﬁ guration of non-Atlantic trans-regional blocks, but also because they are additionally forging alliances between themselves. For example, in July 2014, the ﬁ rst UNASUR-BRICS summit was held in Brasília. Venezuelan President Nicolás Maduro indicated that

This is a unique event that will create new global geopolitics …[The UNASUR-BRICS summit] is an extraordinary opportunity to make progress in constituting an alliance of blocs and regions, a ﬁ nancial, economic and energy alliance […] Mechanisms with similar characteristics are converging: UNASUR and BRICS, which have arisen through countless efforts and paths. They are uniting their paths and the agendas now.35 Maduro furthermore proposed close cooperation between the Caracas-based Bank of the South and the recently founded BRICS Development Bank in Shanghai.36

CELAC: The Community of Latin American and Caribbean States

Another outstanding role of Chile in regional alliance-building has been the creation of CELAC. CELAC is the Community of Latin American and Caribbean States founded in 2011. Again, a Chilean—Sebastián Piñera—was its ﬁ rst President pro tempore37 (December 3, 2011–January 28, 2013). Francesca Ghersenti commented for International Democracy Watch:

This new-born Community encompasses all the American States, excluding only Canada and the United States. The aim of this regional Community is to create harmonisation and to establish an integration process throughout all the countries of the Continent, strengthening the political and diplomatic autonomy of Latin America. Moreover, CELAC’s objective is that of playing a key role in the resolution of regional conﬂ icts, strengthening democratic values and promoting economic development. In the future, CELAC hopes to gain increased importance for future generations by supporting freedom, progress, solidarity, and respect. One may say that CELAC is only the last Community to have joined the other numerous regional organisations for regional integration [in Latin America, i.e. MERCOSUR, CAN, ACS, OECS, NAFTA, SICA, CARICOM. However, CELAC is the ﬁ rst and only one to include all the American countries—not only the Spanish speaking ones, but also Brazil, Haiti, the English speaking countries, the Dutch Caribbean states, and Cuba, usually excluded from other regional organisations.38

35 Embassy of the Bolivarian Republic of Venezuela: Maduro Highlights BRICS-UNASUR Convergence, July 17, 2014, http://venezuela-us.org/2014/07/17/maduro-highlights-brics-unasur- convergence/ . 36 APA: BRICS found their own Developmental Bank, loc cit. 37 Notiamerica: Chile asume la primera presidencia de la CELAC con la intención de impulsar la integración regional, December 3, 2011, http://www.notimerica.com/politica/noticia-celac-chile- asume-primera-presidencia-celac-intencion-impulsar-integracion-regional-20111203220733.html . 38 F. Ghersenti: CELAC New Latin American Community. In: International Democracy Watch, 20 January 2012, http://www.internationaldemocracywatch.org/index.php/news-archive/492-celac- new-latin-america-community . 202 R. Benedikter and K. Siepmann

In the view of some member countries, CELAC is an ideal venue for building a more extended and close relationship with Europe not only through the intensiﬁ cation of concrete single measures such as, for example, the cooperation in science which, among other ﬁ elds, is rapidly expanding in Chile’s case with the construction of the “European Extremely Large Telescope”, or E-ELT, in northern Chile since June 2014:

On June 20, [2014,] offi cials from the European Southern Observatory blew the top off a mountain in northern Chile called Armazones, breaking ground for what is planned to be the largest, most powerful optical telescope ever built. Known as the European Extremely Large Telescope […], it will have a segmented mirror 39 meters (about 128 feet) in diameter, powerful enough to see planets around distant stars. By comparison, the largest telescopes now operating are 10 meters in diameter. The [existing] European Southern Observatory consortium’s Very Large Telescope array, in Chile, is made up of four eight- meter telescopes. The European Southern Observatory is a consortium of 14 European nations and Brazil, which has agreed to join […] Brazil’s offi cial entrance would put the group more than 90 percent of the way toward the $1.5 billion dollars the telescope is projected to cost, enough to begin big-ticket items like a dome, said Lars Christensen, a spokesman for the consortium. The telescope should be ready on June 19, 2024. ‘We’ll all be back here’ said Tim de Zeeuw, the group’s director general, at the groundbreaking […] The inauguration of these new telescopes early in the next decade will further enshrine the Atacama Desert in Chile, which is bone-dry, high, dark, and blessed with remarkably steady air, as the center of world astronomy… The whole neighborhood, in fact, is booming. 39 But this is by far not all when it comes to Chile, CELAC, and Europe. During Chile’s presidency of the CELAC, the fi rst bi-regional summit with the European Union was held in Santiago in January 2013 with the theme “Alliance for Sustainable Development: Promoting Investments of Social and Environmental Quality”. It ended with the CELAC-EU Santiago Declaration,40 a 48-point joint pronouncement issued in Chile’s capital on a wide range of topics, including con- demning terrorism and economic protectionism, promising to reduce greenhouse gas emissions, and addressing mutual investment promotion, workers rights, the future of education, and gender issues. Former President Piñera, who had constantly pushed the image of “Chile’s active and decisive leadership”, 41 commented on the event:

It is without doubt a summit with historical connotations. First, because its objective is to advance towards a strategic alliance between both sides of the Atlantic Ocean, which allows a sustainable and lasting development of our people. Second, because never before have the countries of Latin America and the Caribbean jointly received, as a bloc and presided over by Chile, the European leaders, which speaks of a region that is learning to integrate itself despite our differences while still valuing our diversity. Third, because even though we still have a lot to learn, the truth is that our region never had so much to say and to share with the world as it does today. 42

39 D. Overbye: More Eyes on the Skies. In: The New York Times, July 22, 2014, p. D1, http://www. nytimes.com/2014/07/22/science/space/more-eyes-on-the-skies.html . 40 Council of the European Union and CELAC: The Santiago Declaration, January 27, 2013, http:// eeas.europa.eu/la/summits/docs/2013_santiago_summit_declaration_en.pdf . 41 Gobierno de Chile: Memoria Internacional Presidente Sebastián Piñera 2010-2014, loc cit., p. 24. 42 Ibid., p. 147. 8 Conclusion and Outlook: Chile, Quo Vadis?… 203

Piñera is undoubtedly right, and Herman Van Rompuy, President of the European Council up to the end of 2014, conﬁ rmed his words with regard to shared values, asserting that there is no continent closer to Europe today than Latin America43 :

The relationship between Europe and the Americas goes back more than 500 years. Our close political and economic ties are founded on profound cultural afﬁ nities […] As a result of [our] shared journey through history, we are united in our commitment to the universal values of human rights and democracy. […] Together the countries from our regions represent roughly one third of the UN membership of the General Assembly, more than a billion citizens and around one-third of the global economic output. […] You can imagine that the European Union, from our own experience of integration, views with great interest and sympathy the ambitious project of political, economic, social and cultural cooperation that CELAC represents. […] To counter the global challenges, we need political globalisation, and a value driven movement. The fact that we share common values is an important element in pursuing common goals in our foreign policy, based on the rule of law, human rights and peace and security. 44 Since CELAC—unlike the Organization of American States (OAS) founded in 1948—does not include the United States and Canada, many of the area’s left-wing political leaders celebrated the establishment of CELAC like a “second independence” for Latin America from U.S. inﬂ uence.45 Piñera in turn argued that

CELAC should be a compliment to the Organization of American States, not a competitor […] It is not meant to replace the OAS, which has a permanent secretary general and institutions.46 Interestingly, Chile plays a prominent role in the OAS too since the prestigious ofﬁ ce of secretary general is held by Chile’s former minister of the Interior, José Miguel Insulza, since 2005. According to Tim Rogers, Piñera added that CELAC would be

“An important platform for Latin America to engage in more ‘symmetric and horizontal relations’ with the EU and other regions in the world. 47 Michael Shifter, president of the Center for Inter-American Dialogue in Washington DC,48 retorted rather critically:

CELAC is holding regular meetings, whose value should not be dismissed. But so far there are few signs that it is becoming an effective regional organization. […] There are just too many differences and divisions within CELAC to progress on substantive policy questions. […] I doubt that Washington is terribly concerned about being excluded. The U.S. will want to focus on its own agenda and opportunities for deeper engagement with a set of friendly [Latin American] governments. 49

43 T. Rogers: CELAC aims high in fi rst summit with EU. In: The Nicaragua Dispatch, January 28, 2013, http://nicaraguadispatch.com/2013/01/celac-aims-high-in-fi rst-summit-with-eu/ . 44 European Council, The President: Remarks by the President of the European Council Herman Van Rompuy at the opening of the EU-CELAC Summit, January 26, 2013, http://www.consilium. europa.eu/uedocs/cms_data/docs/pressdata/en/ec/135035.pdf . 45 T. Rogers: CELAC aims high in fi rst summit with EU, loc. cit. 46 Ibid. 47 Ibid. 48 Center for Inter-American Dialogue: http://www.thedialogue.org/ . 49 T. Rogers: CELAC aims high in fi rst summit with EU, loc. cit. 204 R. Benedikter and K. Siepmann

Among them is certainly Chile. Indeed, the political agenda of Piñera as fi rst President of CELAC could be interpreted as an expression of divergent visions and trajectories of contemporaneous Latin America, since Piñera not only fostered “Atlantic cooperation” with Europe, but was also—in his own words—the “major driver” of the “Pacifi c Alliance”, another Latin American trade bloc consisting of Chile, Peru, Colombia, and Mexico.50 Former Peruvian President Alan Garcia organized the initial meeting between the four member states in 2011 to establish the alliance which resulted in a statement of intent, the “Lima Declaration”.51 The objective of the “Pacifi c alliance” is the creation of a joint diplomatic representation, a visa-free travel area among the member states and the expansion of free trade with a clear orientation towards Asia. The Constitutive Treaty was signed on June, 26, 2012 on the mountain Cerro Paranal in Chile’s Atacama Dessert and today besides its four member states, the group also has 33 observers: Australia, Belgium, Canada, China, Costa Rica, Dominica, Dominican Republic, Ecuador, El Salvador, Finland, France, Germany, Guatemala, Honduras, India, Israel, Italy, Japan, Morocco, Netherlands, New Zealand, Panama, Paraguay, Portugal, Singapore, South Korea, Spain, Switzerland, Trinidad and Tobago, Turkey, United Kingdom, United States, and Uruguay. In his international memoir Piñera noted:

Despite its short life, with great satisfaction today we can see that this alliance represents the sixth largest economy in the world and has attracted great interest from the international community. This has contributed decisively to the fact that in the last four years our exports have increased more than 40%, from US$55 billion to nearly US$80 billion, and that Chile is today the second largest recipient of foreign investment in Latin America, of about US$30,000 million, just after Brazil.52

2014–2018: Probable Further Integration Efforts: With Chile in a Lead Role

Despite such positive trajectories and Chile’s repeated and continuing regional leadership, the country’s new government under Bachelet II has pointed to the lack of structural, i.e. “serious” integration between the South American countries. It has criticized the tradition of rhetorics of uniﬁ cation without practical consequences, the foundation of countless alliances without concrete effects, and the dispersion of initiatives unable to construct a common horizon of convergence.53 In the govern-

50 The Pacifi c Alliance: http://alianzapacifi co.net/en/home-eng/the-pacifi c-alliance-and-its- objectives/ . 51 The Lima Declaration/Declaración Presidencial sobre la Alianza del Pacífi co, Lima, 28 de abril de 2011: http://alianzapacifi co.net/documents/AP_Declaracion_Lima_I_Cumbre.pdf . 52 Gobierno de Chile: Memoria Internacional Presidente Sebastián Piñera 2010-2014, loc cit., pp. 15-16. 53 Ibid. 8 Conclusion and Outlook: Chile, Quo Vadis?… 205 mental program of Bachelet II (2014–2018), a proposal for progress is brought forward once again by Chile:

The shift of the international strategy of the U.S. towards privileged relations with Pacifi c Asia made an end to the previous decades of priority of the Atlantic Alliance, despite of the commercial negotiations with the European Union [on a new Transatlantic Free Trade Agreement, author’s note]. The axis of international politics in the 21st century will be in the Pacifi c. The foreign policy of the […] government [Bachelet II] thus must contribute to the achievement of greater regional unity. We need to strengthen our participation in the different existing mechanisms for regional integration in Latin America, in particular in South America, as well as in the constitution of [our] block of countries as a region. We need to build bridges of understanding between the ideological and sub-regional differences. UNASUR should become a point of confl uence of the different initiatives for integration of South America, while CELAC should become an institution of political coordination of the region. 54 Similar to Piñera’s foreign policy, Bachelet II pursues a “meta-integrative” strategy with regard to Chile’s alliances and has criticized the attitude of the “Pacifi c Alliance” leaders to exclude South America’s more left-leaning countries. In order to get to a more integrative approach, Bachelet proposed a meeting of MERCOSUR and the “Pacifi c Alliance” leaders in June 2014:

I think that beyond the differences, it’s perfectly possible in the future to create agreements between the countries of the Paciﬁ c Alliance and Mercosur. […] It’s not just possible, it’s necessary. 55 Furthermore, in the governmental program of Bachelet II, it is pointed out that Chile has recently lost presence in the region and wants to recover its active leadership role:

Chile has lost presence in the region. [Our] relationships with our neighbors are problematic, a mercantile vision is dominating our ties with other Latin American countries and the options for external integration have been ideologized. Our country needs to recover its role as active promoter of regional convergence confi rming its commitment to active and sustainable politics of integration. Chile should positively value the diversity that characterizes Latin America. […] The main objective of Chile’s foreign policy should be the articulation of closer, but fl exible, relations with the region of Pacifi c Asia. […] In favor of this, Chile should consolidate its status as ‘port country’ and ‘bridge country’ between the Latin American nations of the South Atlantic and Pacifi c Asia, which requires a better interconnectivity, a higher capacity of our ports and the perfection of our services. Chile has the ability to carry out a connecting role between the economies of both sides of the Pacifi c using our strong commercial ties in the region as well as our extensive net of free trade agreements. Therefore we favor collective Latin American relations with ASEAN [the Association of Southeast Asian Nations].56

54 Governmental Programme Michelle Bachelet 2014-2018, http://www.scribd.com/fullscreen/ 211270656?access_key=key-4cnrgj2mkcmypsvf48v&allow_share=true&escape=false&view_ mode=book , p. 154. Translation from Spanish by the authors. 55 Mercopress: Bachelet proposes meeting of Mercosur and Paciﬁ c Alliance leaders, June 21, 2014, http://en.mercopress.com/2014/06/21/bachelet-proposes-meeting-of-mercosur-and-pacific- alliance-leaders . 56 Governmental Programme Michelle Bachelet 2014-2018, loc cit., p. 154. Translation from Spanish by the authors. 206 R. Benedikter and K. Siepmann

There are two points of particular strategic importance for Chile’s future here. First, the expression “closer, but fl exible” relations with Pacifi c Asia is no accident. Chile’s macrostrategic orientation will depend on the future of China, not only economically, but also societally. The direction of development of the Middle Kingdom—to the rule of law, democratization, or a return to more authoritarian pat- terns57 —will unavoidably also infl uence Chile. Using the formulation “closer, but fl exible”, Chile avoids committing unreservedly to Pacifi c Asia: a precautionary measure from a nation that has much to lose if it associates too closely with anti- American or even Anti-Western governments in the region. Second, it can be assumed that despite all such new openness of the moderate leftist Chilean government of Bachelet II towards “non-ideologized” relations with (partly radically) leftist Latin American countries, its foreign policy will remain as realistic as that of her predecessor Piñera in the end. The question of how closely Chile will be willing to associate itself with nations such as Venezuela or Bolivia, who are not on the best of terms with the West, but rather incalculable international actors, will depend on many factors and the circumstances. Chile’s approach to these still unaddressed issues of how to differentiate between allied, befriended, economically related, or just geographically close actors, and how to protect its interests while integrating as many countries as possible in positive interrelations will be decisive for the destiny of the new Latin America given the Andean nation’s economic power, its level of development, and its international integration as OECD member.

Chile’s Future Foreign Policy: Which Geopolitical Direction to Take?

Taking these (to some extent crucial) elements together, the outlook in Chile’s foreign policy perspectives is mixed, in particular if it comes to geopolitical orienta- tions. Thus, Chile’ foreign policy is as much in transition as its other parameters. Should Chile choose the U.S. or China as its privileged “Pacifi c partner”? Or are its European (Atlantic) roots still the better bet? This will be without doubt a diffi cult long-term strategic decision in the present window of globalization. Most probably, Chile will (necessarily) choose all three ways of interconnecting, and this will result in a sometimes diffi cult balancing act. Chile’s still unclear future relationship with the emerging Latin American coalition around Brazil, and thus to the BRICS (i.e. the loose association of emerging countries consisting of Brazil, India, Russia, China, and South Africa), has to be added as another open variable. The fact that the BRICS have initiated a process of greater independence from international institutions dominated by the West, such as the World Bank and International Monetary Funds, by founding their own

57 R. Benedikter and V. Nowotny: China’s Road Ahead: Problems, Questions, Perspectives, loc cit. 8 Conclusion and Outlook: Chile, Quo Vadis?… 207

Developmental Bank and their own Monetary Funds in July 201458 with US$50 billion (10 billion in cash and 40 billion in guarantees to attract new money), raises the question if, and if yes to what extent, countries such as Chile with strong ties to BRICS member states will shift closer to this trend or not, and in what ways they may choose to be afﬁ liated or connected with it, or not. Given that every country can invest in the newly founded ﬁ nancial bodies of BRICS starting from just US$100,000, nations like Chile must be “naturally” interested in getting a foot in the door of regional success.59 In any case, that both Chinese president Xi Jinping 60 and Russia’s Vladimir Putin 61 toured Latin America in summer 2014 proved the rising importance of the continent to the BRICS, and to non-Western powers in general. Given that the U.S. and China are in the midst of a race for resource and trade ties with Latin America in which Europe will also participate, Chile will try to fully grasp the new opportunities resulting from the situation both regionally and internationally.62

Issue 3: Sustainable Approaches to Resources and Energy

In addition, Chile’s foreign policy—like the general theory and practice of international relations—will be infl uenced, perhaps more than by other factors, by the impact of the rising importance of strategic resource partnerships on existing power relations and strategic alliances. The signifi cance of such international partnerships is likely to increase in the coming years also in Latin America. This could shift the notion of enduring and concept-based “alliances” to that of temporary and interest- based “partnerships”, i.e. “closer, but fl exible ties”, as Bachelet rightly expressed it. Today, Chile serves as a unique example of the systematic development of trade partnerships on a global level including free trade agreements with 60 countries. What are the reasons for the nation’s such strong focus towards the outside? First , it is linked to Chile’s natural resources (i.e. copper, wood, wine, agriculture) and their profi t-maximizing capitalization on the world markets. The Chile of today is a highly developed export economy; and it will continue to develop further as such.

58 APA: BRICS found their own Developmental Bank, July 15, 2014. 59 N. Alexander and H. Löschmann, Heinrich Böll Foundation: BRICS Summit Reader: The Club in the G20 Club. Special Newsletter, Issue#20, July 2014, Berlin 2014. 60 W. A. Sanchez: China’s President Xi Jinping’s ambitious Latin American tour. In: Voxxi, July 12, 2014, http://voxxi.com/2014/07/12/chinese-president-latin-american-tour/ . 61 D. Rosette: Russia writes off Cuba’s $32 billion debt. In: Voxxi, July 11, 2014, http://voxxi. com/2014/07/11/russia-forgives-cuba-debt/ . 62 N. Chitaia: Foreign Policy Initiative Bulletin: The U.S.-China Race for Trade Ties in Latin America. In: FPI, August 4, 2014, http://www.foreignpolicyi.org/content/us-china-race-trade-ties- latin-america . 208 R. Benedikter and K. Siepmann

Second, Chile’s outstanding level of international connection points to the growing insecurity of energy supply and the country’s awareness of its foreign dependency in that domain. After the presentation of Michelle Bachelet II’s energy policy (2014–2018) in June 2014 The Economist commented:

Chile is desperately short of cheap fuel. It produces virtually no oil and gas of its own and for years relied on imported natural gas from Argentina. But the Argentines proved to be fi ckle suppliers. When their own domestic demand grew, they closed the valves on the huge gas pipelines running through the Andes, leaving Chile high and dry. The Chileans toyed with the idea of going nuclear, but the Fukushima disaster of 2011 put paid to that idea. Chile is every bit as prone to earthquakes and tsunamis as Japan. In theory, the Chileans could import gas from neighbouring Bolivia but in practice history and politics rule that out. The Bolivians refuse to sell gas to Chile because of a border dispute dating back to the 19th century. Chile has hydro-electricity in abundance but has been hit by severe droughts in recent years. And as the green lobby has grown stronger, companies have found it increasingly diffi cult to get environmental approval for new energy projects. All of which leaves Chile in a bit of a pickle. The average electricity bill has jumped by 20 % since 2010 and the government says it will rise by another 34 % over the next decade if nothing is done now. Chile’s vast copper mines already pay twice as much for their electricity as their peers in neighbouring Peru.63 Furthermore, 1. Since Chile’s extraction industry, especially the mining sector, consumes enormous amounts of the country’s energy 2. Given that the production of energy requires huge amount of resources (e.g. water) There is a complex interrelation of problems between Chile’s resources, the extraction process, and the energy situation. In recent years, civil society protests increasingly criticized environmental degradation, water shortages and droughts, high prices, lack of worker protection, and the sectors’ inbuilt inequalities (most profi ts go to the owners, not to the workers). Most discussions were linked to over- proportional economic concentration, lack of transparency, failure to apply legal mechanisms (i.e. tax evasion, corruption), and the pressing question of socially just distribution of profi ts. These discussions are likely to go on in the coming years, until they fi nd social compromises able to pacify the mood of all parties involved. In addition, resource extraction and energy supply point to growing geopolitical confl icts over territory rights in Latin America, just as in the rest of the world (who has access to land, water, food etc.?). The issue is about ownership of the economic, political, and cultural meaning of still untouched nature. The fi ght for disputed territory is a fi ght for political power between national states, but in many cases also for resources.

63 The Economist: Energy in Chile, June 11, 2014, http://www.economist.com/blogs/americasview/2014/06/energy-chile . 8 Conclusion and Outlook: Chile, Quo Vadis?… 209

Considered together, the issues of resources and energy in current Chile are closely connected to questions of political choices regarding the overall developmental model. The question is not so much whether resources should be extracted and energy produced, but rather 1. How the speciﬁ c mechanisms of resource extraction and energy production are going to work in the interplay between government and civil society. 2. How to organize fair and democratic decision-making in order to achieve a sustainable balance between civic rights, environmental legislation, and extraction ratio. Finally, the rise of resource and energy questions to core political issues of the coming years (in both domestic and foreign policy) will affect the anticipation practices of leading and emerging powers, as well as their strategic interweavement and their willingness to “long-term diplomatic investment”, including the avoidance of serious ruptures despite political and ideological competition. Most strategic resource partnerships in the years ahead will not be forged primarily in the perspective of a stable and just order system, but rather as an ongoing process that is proportional to the increasing speed of economic and social development and the necessities on the ground. That strategic resource partnerships are carried out prag- matically beyond ideological aversions, or parallel to them, could result both as a mitigating and de-idealizing factor in international relations. That is true also for Chile and its interrelation with its region (potentially including “leftist” or “competing” nations in the neighbourhood) as well as internationally (not least regarding Chile’s envisioned greater involvement in “Paciﬁ c” affairs).

Issue 4: Global Climate Change and Multi-Dimensional, Interconnected Care of the Environment

In conjunction with these elements, some of the most interesting future questions will be Chile’s positioning in face of the problem of global climate change and the rescue of the (local and global) environment, in particular of biodiversity and the diversity of species in general, and as a consequence, the nation’s stance toward sustainability. The country’s current constellation shows both 1. A growing resource and energy dependency. 2. An increasing civic demand for coordinated development toward sustainability and the protection of nature. It is noteworthy that many of the questions related to climate change, the question of “nature”, and the (at least rhetoric) ﬁ ght against environmental change are acquiring a strong foreign policy dimension, including the consideration of “territorial” aspects. Under the Piñera administration (2010–2014), Chile strategically extended its presence in the Antarctic, which according to the former president is 210 R. Benedikter and K. Siepmann

“the white continent, the continent of peace, of the future”, 64 where Chile must “strengthen its presence”65 :

A few weeks ago we have added the ﬁ rst Chilean base within the Antarctic Circle in Union Glacier, just 1,080 kilometers from the South Pole [which] will join the two existing only [ones] in the ‘end zone’: the Scott-Amundsen U.S. and China Kunlun base. 66 Chile’s search for new territory and resources reﬂ ects a global trend, as mentioned particularly noticeable in the club of the fast-growing BRICS-states. India and China, for example, have already achieved observer status for new extraction spaces for oil and gas in the Arctic that became exploitable due to the melting of the polar ice caps as an effect of global warming.67 Simultaneously, China has been consistently claiming special derogations for climate protection within the Kyoto Protocol, indicating that the Middle Kingdom should still belong to the group of emerging powers or even to that of developing countries, although the Asian giant has in the meantime taken over the global leading position in emission discharge. 68 Russia and other nations such as (in part) Canada are also trying to take advantage of the warming Northern permafrost, which contains vast resources of timber, minerals, oil, and natural gas, but in the 69 process also is setting huge amounts of CO2 free. Chile in turn

ratiﬁ ed the Kyoto Protocol in 2002 and the United Nations Framework Convention on Climate Change (UNFCCC) already in 1995. While Chile currently has no binding international or national obligations to reduce GHG emissions, the country is an active member in UN-led global climate change negotiations and embraces the principle of common but differentiated responsibilities for a post-Kyoto framework. 70 Rafael Quiroga, former General Manager and current Manager of External Affairs at Accion RSE (Responsabilidad Social Empresarial en Chile /Business for Social Responsibility in Chile), a Chilean non-proﬁ t-organization founded by Chilean domestic and international CEO’s in 2000 (i.e. by CPMC, Banco Santander, Deutsche Bank, Shell and XEROX), commented in a seminar on “Corporate Strategic Management of Climate Change and Greenhouse Gas (GHG) Emissions” in Santiago de Chile in 2009:

64 Gobierno de Chile: Memoria Internacional Presidente Sebastián Piñera 2010-2014, loc cit., p. 18. 65 Ibid. 66 Ibid. 67 Reuters: Chinese army think-tank says Arctic energy would help economy, June 18, 2014, http://uk.reuters.com/article/2014/06/18/china-arctic-idUKL4N0OZ36720140618. 68 S. Wolfe: Dirty deeds: The world’s biggest polluters by country. In: Global Post, January 1, 2014, http://www.globalpost.com/dispatch/news/science/global-warming/140113/dirty-deeds- the-worlds-biggest-polluters-co2-emissions-country. 69 United Nations Environment Programme (UNEP): Policy Implications of Warming Permafrost, without year, http://www.unep.org/pdf/permafrost.pdf . 70 GFEI Global Fuel Economy Initiative: Case Study Chile, http://www.unep.org/transport/gfei/ autotool/case_studies/samerica/chile/cs_sa_chile.asp . 8 Conclusion and Outlook: Chile, Quo Vadis?… 211

In the past 10 years Chile’s growth rate of GHG emissions has been among the highest on the planet, alongside those of China and India. The main culprits for this have been 1. The booming… energy-mining sector 2. An increase in automobile use with economic growth 3. An increased reliance on coal in recent years because of disruptions in imported gas supplies from Argentina One recent study of the University of Chile actually found that Chile’s national GHG footprint is projected to jump 4.2 times its current amount by 2030. This conclusion assumes the country continues at its current pace and manner of economic development, and with the increased reliance on new coal plants that are currently in different stages of construction. 71 All things considered, there seem to be some contradictions between the nations’ attitude with regard to climate change, its “naturally” growing hunger for resources, and its rapidly growing Climate Change and Greenhouse Gas emissions. It appears that Chile, like other similarly developed and developing nations, is preparing to take advantage of the effects of global warming and is increasing emissions while at the same time contributing to the global effort to stop climate change. Global climate change will likely worsen in the coming decade, which could result in new political or even (limited) military actions if the global policy system fails to generate appropriate cooperative and sustainability-oriented solutions in time. A symptom of the respective ambiguity was the mega-project HidroAysén , which was one of the largest energy projects in the history of Chile. This project turned into an essential element in the mobilization and expansion of Chile’s environmental movement, particularly from 2011 onwards. After years of contention and protest, the project was ﬁ nally stopped in June 2014 by the government Bachelet II:

A government commission rejected an $8 billion proposal to dam Patagonian rivers to meet growing energy demands, handing a victory to environmentalists who praised the ruling. The commission, including the [Chilean] ministers of agriculture, energy, mining, economy and health, voted unanimously to reject the HidroAysén plan, which would have tamed two of the world’s wildest rivers, the Baker and Pascua, and built more than 1,000 miles of power lines to supply energy to central Chile. Patricio Rodrigo, executive secretary of the Patagonia Defense Council, called the decision ‘the greatest triumph of the environmental movement in Chile.’ Chile is strapped for energy, but most Chileans opposed the plan.72 Symptoms like this suggest that if Chile wants to regain its status as an international “role model”—as envisaged and promoted over years by former president and potential new presidential candidate for the elections 2017–2018, Sebastian Piñera—it needs to develop an exemplary strategy in the ﬁ eld of resources and the environment for itself and for the greater costellation of Latin America. In face of the constantly growing world population and the resulting aggravation of the environmental problem, questions of clean and intelligent energy as well as the promotion of a joint, compromising developmental model of sustainability will most

71 R. M. Speiser: Chile fi ghting climate change – role model for the developing world. In: Cleantechies.com, July 29, 2009, http://cleantechies.com/2009/07/29/chile-fi ghting-climate- change-role-model-for-the-developing-world/ . 72 The New York Times: Chile: Patagonia Dams Rejected, June 11, 2014, p. A9. 212 R. Benedikter and K. Siepmann likely achieve one key role in the evaluation of what a “good society” can be in the twenty- fi rst century. Chile can be on board with this in time, if it plans in anticipation. The question of how to anticipate sustainable futures will impact different nations’ potential to become “leaders” (Sebastián Piñera) in every given space-time framework. That will be true also for Chile. Accordingly, president Bachelet (at the start of the government Bachelet II) announced in June 2014 that

Between now and 2025, 45 % of the newly installed energy generation capacity in Chile will come from non-conventional renewable sources. 73 Indeed, besides political ambitions due to Chile’s geographic and climatic peculiarities, the country could become a “laboratory” for testing a new generation of technologies in solar, wind, geothermal, and other alternative powers, which in the ideal case would harm the environment less than previously envisaged macro- projects. And in fact, the nation has taken impressive concrete steps:

The Chilean Renewable Energy Center released its annual report for 2013, and the numbers send a clear message: Chile’s non-conventional renewable energy sector is where the action is. While conventional energy projects—coal and large hydro—linger in judicial appeals and administrative reviews, developers are advancing solar, wind and other renewable projects with gusto. If the new government can help remove some of the remaining obstacles to renewables’ growth, we can expect these numbers to be even higher […], proving that the future of Chile’s energy sector is in clean, sustainable and renewable energy. According to the report, at the end of last year there were over 18 GW in renewable capacity on the books, meaning projects that were in operation, under construction, approved and under review. This is about a 39 percent growth over 2012’s then-impressive total of almost 11.5 GW. To put this in perspective, Chile’s two main grids (which cover more than 99 percent of the whole country’s energy generation) have a combined installed capacity of approximately 17.5 GW. So the combined capacity of all the renewable projects operating or in the pipe- line at the end of 2013 was more than the installed capacity of the existing grids. That is remarkable.74 In addition, Chile has established research cooperations with leading foreign universities and internationally recognized research centers as a step that could be crucial to further advance a genuinely sustainable energy production for the nation. If Chile continues on this path and goes “from good to great”75 , it will also inspire its neighbours. The CELAC-EU Santiago Declaration has further opened the way for a sustainable future, and cooperation with Europe on sustainability could indeed

73 The Economist: Energy in Chile, June 11, 2014, http://www.economist.com/blogs/americasview/2014/06/energy-chile . 74 A. Maxwell: The future of Chile’s energy sector lies with renewable energy, new report shows. In: Switchboard. Natural Resources Defense Council, March 19, 2014, http://switchboard.nrdc. org/blogs/amaxwell/the_future_of_chiles_energy_se.html . 75 P. Morgan, D. Martinez et. al: From Good to Great. The Next Step in Chilean Energy Efﬁ ciency. Natural Resources Defense Council Report, March 2014, http://www.nrdc.org/international/chile- lcoe.asp . 8 Conclusion and Outlook: Chile, Quo Vadis?… 213 be in Chile’s interest, since it is not really a strength of China or the USA. As the declaration says:

13. We express our commitment to achieve sustainable development in its three dimensions: economic, social and environmental, in an integrated and balanced way. In this regard, we support all initiatives which imply the strengthening of cooperation, the transfer of knowledge and the preservation and conservation of natural and cultural heritage as well as the protection of biodiversity… 76 And also:

42. We recognise that planet Earth and its ecosystems are our home and that ‘Mother Earth’ is a common expression in a number of countries and regions. We note that some countries recognise the rights of nature in the context of the promotion of sustainable development. We are convinced that in order to achieve a just balance among the economic, social and environmental needs of present and future generations, it is necessary to promote harmony with nature.77 In order to achieve this, one key will be the reform of the mining sector, which has one of the biggest environmental footprints in present Chile.78

Issue 5: Resilience, Security, and Peace Politics

Last but not the least, security policies are growing rapidly in importance for Chile, as they are for a number of other countries too. Regarding the country’s security situation of the past couple of years, there seems to be a slow, but gradually increasing trend towards radicalization on the streets. Even though in 2014 the frequency of protests and the number of attendants have decreased compared to the (in the meantime proverbial) “social protest year” 2011, symptoms that point towards a growingly violent climate are on the rise. On September 8, 2014, just 3 days before the 41st anniversary of Chile’s 1973 military coup against then socialist President Salvador Allende, a bomb exploded in the metro-station “Escuela Militar” (Military School) in Santiago injuring at least 14 people.79 Being the worst bomb attack in decades the government called it a “terrorist attack” and president Bachelet added:

76 Council of the European Union and CELAC: The Santiago Declaration, loc cit., point 13, p. 3. 77 Council of the European Union and CELAC: The Santiago Declaration, loc cit., point 42, p. 11. 78 S. Nolen: Mining reforms key to Chile’s future. In: The Globe and Mail, November 25, 2013, http://www.theglobeandmail.com/report-on-business/international-business/latin-american-business/mining-reforms-key-to-chiles-future/article15594254/ . 79 The New York Times/Associated Press: Chile: Bombing in Santiago Wounds at Least 14 People, September 8, 2014, http://www.nytimes.com/2014/09/09/world/americas/chile-at-least-14-people-injured-in-santiago-bombing.html . 214 R. Benedikter and K. Siepmann

What has happened is horrible, an abominable act. But Chile is, and will continue to be a safe country […] We’re going to use the full force of justice, including invoking the anti- terrorist law. 80 Unfortunately, this “act” was not an insolated one, and Chile isn’t that safe anymore. According to the Christian Science Monitor

Santiago is considered one of the safest capital cities in Latin America, but has been hit by almost 200 attacks or attempted bombings over the past decade and nearly 30 small-scale bombings so far in 2014, mostly at night. Common targets are police stations, public buildings, and banks. Terrorism in Chile is ‘a phenomenon mainly composed of local anarchist groups carrying out small-scale bomb attacks,’ according to a 2012 U.S. State Department report. According to the BBC, Chilean prosecutors are ‘baffl ed’ as to who exactly has been carrying out these attacks: Around 80 different groups have claimed responsibility for the attacks and prosecutors say they do not know if they are dealing with one group that continually changes its name or many separate cells.81 Eighty allegedly “anarchist” groups operating foremost in Chile’s capital, mainly at night, is a lot. The origin of their “acts” remains widely unclear, although sometimes anarchist and student groups are—falsely, and in an oversimplifying manner— identifi ed with each other by parts of the media. According to Salinas and Fraser, the students, who were the main actors of Chile’s social protest movement since 2011, only promoted pacifi c means of protest:

Throughout the confl ict, students defi ned their movement as nonviolent, whereas the government accused them of promoting disorder and destroying private and public property. A common feature of social protest in Chile, including but not limited to student protests, has been the presence of hooded protesters who have usually appeared towards the end of marches and demonstrations throwing stones, starting fi res, or looting stores. Student leaders denied responsibility for these actions and made persistent public calls to their fellow students to use only pacifi c means of protest. Police repression of these kinds of actions was very strong, and the number of individuals arrested and injured in protest events extraordinarily increased as the movement gained momentum.82 The analysis of fi gures on violent acts in Chile over time is telling: – The number of arrests tripled between 2009 (5,630) and 2011 (16,464) – The number of injured civilians grew by fi ve times (2009: 165; 2011: 822) – And the number of injured policemen increased eightfold in the same period (2009: 142; 2011: 1,115)83 Since May 2014, news on violent confrontations and “wars on the street” between protesters and police in Chile have become frequent in the national and

80 W. Eulich: Chile invokes controversial antiterror law after Santiago bomb blast. In: The Christian Science Monitor, September 9, 2014, http://www.csmonitor.com/World/Americas/Latin-America- Monitor/2014/0909/Chile-invokes-controversial-antiterror-law-after-Santiago-bomb-blast-video . 81 Ibid. 82 D. Salinas and P. Fraser, Pennsylvania State University: Educational Opportunity and Contentious Politics: The 2011 Chilean Student Movement, loc cit., p. 33. 83 Ibid. 8 Conclusion and Outlook: Chile, Quo Vadis?… 215 international press. Most media reported the routine use of tear gas and water cannons,84 and some related the growing violence to the mobilizations accompanying the government’s and opposition’s negotiations over the tax and educational reforms.85 All things considered, on the national level one of Chile’s most pressing tasks in the years ahead will be the avoidance of further polarization and radicalization leading to senseless acts of violence. If Chile wants to maintain its level of resilience, the country’s current multi-dimensional transition should be accompanied by new “peacekeeping” efforts and dialogue with the various social and political actors, in whatever way they may be carried out. On the international level, Chile has been an active promoter of world peace already for decades, according to former president Sebastián Piñera:

In the humanitarian fi eld and to promote world peace, my responsibility [was] to participate in several peaks of nuclear disarmament; [and to] create a fund to fi ght hunger and poverty to contribute to the fi ght against this scourge in other nations. We maintained an active presence in Haiti; recognized Palestine as an observer member of the UN and its right to a full, free and democratic state. Also, we have tirelessly advocated a thorough reform of the organization and functioning of the Security Council of the UN, that includes, among others, the expansion of its permanent members, including countries such as Brazil, Germany, India and Japan, to make it fairer and more appropriate to the reality of today’s world and add greater effi ciency and legitimacy of its… representation. In addition, in the short term, we have joined the efforts of countries that veto resolutions to refrain from using their veto in situations of crimes against humanity, war crimes, genocide or ethnic cleansing. And for the medium term, we have raised the need to move towards a profound change in the way the Council adopts its resolutions, to leave behind the logic of the veto, which responds to an ancient world that no longer exists, in order to replace it by a system more appropriate to this new world of XXI century quorums. This effort of Chile in favor of world peace has been widely recognized with our election as non-permanent member of the Security Council of the United Nations for the period 2014–2015, receiving 186 votes of 191 States and the unanimous support of Latin America and the Caribbean, as well as our re-election at its Human Rights Council for 2011–2014.86 The unopposed election of Chile in the Security Council 87 was indeed just one of the remarkable foreign policy achievements of the small Andean nation that has also committed to a more prominent role in the framework of the cooperative efforts towards peaceful settlements of confl icts stipulated in the CELAC-EU Santiago Declaration:

84 M. Ocean: Students faced tear gas and water cannon in Chile protest. In: Intellihub: Civilian Intelligence Agency, June 12, 2012, http://www.intellihub.com/students-faced-tear-gas-water- cannons-chile-protest/ . 85 The Guardian: Student protest in Santiago: Chile in pictures, June 11, 2014, http://www.theguardian.com/world/gallery/2014/jun/11/student-protest-in-santiago-chile-in-pictures . 86 Gobierno de Chile: Memoria Internacional Presidente Sebastián Piñera 2010-2014, loc cit., pp. 17-18. 87 B. Druttman: Chile elected unopposed to United Nations Security Council. In: The Santiago Times, October 18th, 2013, http://santiagotimes.cl/chile-elected-unopposed-to-united-nations- security-council/ . 216 R. Benedikter and K. Siepmann

20. In view of the contribution that CELAC and the EU can make for peace in the international arena, we agree to explore together ways to foster cooperation for peace and the peaceful settlement of disputes, as well as the promotion of disarmament and non- proliferation at the international level.88

Conclusion: Chile, What Future?

What will the future bring? Whatever happens, and whatever path the nation will undertake in the years ahead, Chile will remain a model of Latin American development both in its achievements and in its problems and chances. As the most internationally and regionally connected country of South America,89 it will simultaneously remain a microcosm with its own laws to study. Nevertheless, understanding Chile has and will continue to have the potential to understand the more general political and ideological currents of the continent. Within Chile itself, democracy and media will continue to act as drivers of social change, including new conﬂ icts and better dialogue. Although its case is as unique as its history and can’t be generalized, Chile can genuinely become a role model for the surrounding geopolitical area and a true leader in Latin America in the perspective of the multipolar world on the rise, if it succeeds to master its own most pressing problems, which are located mainly in the social and inequality arena. These problems are

related to the quality of life in urban areas, collective consumption (public transportation, public housing) and decentralization […] Confl icts also emerge between young people and the state, as the youth demands participation in the processes of democratic transformation and development. Human rights and the search for equality in gender relations are other notable dimensions of confl ict […] Gender-related confl icts [in particular] gain importance with the emergence of movements led by women. These movements propose a transition from domestic space into public space; and they emphasize the central role women play in social production and reproduction. The relationship between public and private spheres is (being) redefi ned… 90 In the end, Chile is (and will continue to be) an example which proves that the authors of “Understanding Social Confl ict in Latin America 2013” are correct in asserting that

Latin America currently has signiﬁ cant, realistic, and perhaps unprecedented opportunities to make profound progress in strengthening its democracies and advancing development. It has emerged reasonably well from the… global crisis and is now experiencing a unique period of relative political stability. Political developments in the last decade, which include the decline in the legitimacy of political parties and the emergence or reemergence of a

88 Council of the European Union and CELAC: The Santiago Declaration, loc cit., point 20, p. 5. 89 Cooperación Latinobarómetro: Informe Latinobarómetro 2013, loc cit., pp. 4 and 84-85. 90 F. Calderón (ed.) for UNDP and UNIR: Understanding Social Conﬂ ict in Latin America, loc cit., p. 18. 8 Conclusion and Outlook: Chile, Quo Vadis?… 217

variety of movements and regimes, to a great extent contributed to a political transformation that could strengthen democracy, development, and the global standing of the region over the long term. At the heart of these processes are issues related to social confl ict and the political capacity to address [such] confl ict.91 All this is true for Chile in particular. What then is the overall conclusion? And what is the perspective that may characterize Chile’s path in the years ahead? Without doubt, Chile has great potential in exceptionally many fi elds: Economics, culture, politics, the social, education, international relations, resources, the environment, and sustainability. If the nation can at least partially unleash its potentials and grow up to its own expectations, it may stand before a golden future.

91 Ibid., p. 10.