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Chile Country Report BTI 2016

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Chile Country Report BTI 2016 BTI 2016 | Chile Country Report Status Index 1-10 8.77 # 8 of 129 Political Transformation 1-10 9.15 # 9 of 129 Economic Transformation 1-10 8.39 # 12 of 129 Management Index 1-10 7.51 # 2 of 129 scale score rank trend This report is part of the Bertelsmann Stiftung’s Transformation Index (BTI) 2016. It covers the period from 1 February 2013 to 31 January 2015. The BTI assesses the transformation toward democracy and a market economy as well as the quality of political management in 129 countries. More on the BTI at http://www.bti-project.org. Please cite as follows: Bertelsmann Stiftung, BTI 2016 — Chile Country Report. Gütersloh: Bertelsmann Stiftung, 2016. This work is licensed under a Creative Commons Attribution 4.0 International License. BTI 2016 | Chile 2 Key Indicators Population M 17.8 HDI 0.822 GDP p.c., PPP $ 22346.0 Pop. growth1 % p.a. 1.1 HDI rank of 187 41 Gini Index 50.5 Life expectancy years 79.8 UN Education Index 0.746 Poverty3 % 2.1 Urban population % 89.4 Gender inequality2 0.355 Aid per capita $ 4.5 Sources (as of October 2015): The World Bank, World Development Indicators 2015 | UNDP, Human Development Report 2014. Footnotes: (1) Average annual growth rate. (2) Gender Inequality Index (GII). (3) Percentage of population living on less than $3.10 a day at 2011 international prices. Executive Summary Chile is at a crossroads. The growing delegitimization of the established “politics of consensus” among the two political blocs, which served democratic consolidation and Chile’s model of development for more than 20 years, eventually led to the perception of a “political duopoly” increasingly irresponsive to the demands of society. This has produced developments in opposite directions. On one hand is the large detachment from political life of broad sectors of the population, which has resulted in apathy and electoral abstention. On the other hand, new and varied social sectors, direct results of the country’s modernization, no longer identified with the established party system and began to take direct action on the streets as social movements. The country is generally developing toward a more diverse and pluralistic society than that which gave rise to the current system of governance, which thus begs to be made more current. The case of university students is paradigmatic in this regard. The deep modernization of the Chilean economy increasingly requires professionals and technicians with high levels of training. The increasing income of the country has allowed the expansion of tertiary education, but this has made education more expensive. Young people and their families from the middle and lower social strata face the dilemma of an expensive higher education, yet one that often lacks the required quality. As they do not form part of the traditional cleavages that shaped the current party system, which showed its inability to integrate them, they have given rise to a new line of conflict. In the last general elections, the party system has managed to give some signals toward the integration of new groups, but the reform of the electoral system opens the door to an uncertain future. The contradiction between a political system that follows its own logic and a civil society that follows another crystallized in the demand for a new constitution, which was assumed in the government program of the current president, Michelle Bachelet. During her first year in office, Bachelet has initiated several fundamental reforms, such as tax reform, the end of the electoral system inherited from Pinochet´s dictatorship and the end of the profit motive in primary and secondary education; new bills have been announced concerning labor reform and abortion. But BTI 2016 | Chile 3 the pending discussion on the mechanisms to establish a new constitution opens questions about the form that will take this new “compact,” and if a new model of economic and social development will emerge in which new players feel part of the political system. Consequently, these discussions may also extend to the country’s economic and welfare regimes, which are institutionally sound and helped the relatively successful development path, but also present certain deficiencies concerning productivity and equity. In sum, Chile is in a process of transformation, the depth of which can not yet be determined. History and Characteristics of Transformation Chile’s recent history is marked deeply by the 17-year dictatorship of General Augusto Pinochet (1973-1990). The dictatorship was characterized by grave, systematic violations of human rights. The socioeconomic model imposed was characterized by extreme ideological liberalism, whereas the state withdrew from its dominant role, not only in the markets but also in social policies like education, health, social security and labor relations. In 1980, Pinochet introduced a constitution that provided the framework which allowed a democratic opposition to organize, ultimately winning a 1988 plebiscite designed to keep Pinochet in power. Free presidential and parliamentary elections were held in 1989, and the candidate for the center-left Concertación coalition, Christian Democrat Patricio Aylwin, was victorious. From 1989 to December 2009, the Concertación won all national elections. The Aylwin government (1990-1994) successfully avoided any relapse into authoritarianism, achieved economic stability and combated poverty. It also established the Commission on Truth and Reconciliation, to clarify the number of murdered and “disappeared” under the military regime, and to find some form of compensation for their families. The government of Christian Democrat Eduardo Frei Ruiz-Tagle (1994-2000) deepened the market economy by extending international trade and implementing new privatizations. Chile reached the highest rates of economic growth in its history, close to 7% annually. Though poverty was significantly reduced, the inequality of income distribution remained. The third Concertación government, led by the socialist Ricardo Lagos (2000-2006) implemented significant reforms at education, health, culture, labor relations, public financing of electoral campaigns, laws on probity in state management, and above all constitutional reforms. In the area of human rights, prominent trials of some high-ranking officers of the Pinochet regime (and of Pinochet himself), along with the Valech Report on Torture and Political Imprisonment, marked historic steps toward justice and reparation. The fourth Concertación government (2006-2010), led by socialist Michelle Bachelet, initiated major reforms to the state system of social protection with the goal of promoting social equity, and introduced a reform to the social security and pension systems. Despite Bachelet’s successful management of an economic crisis and high approval ratings, she failed to transfer her immense popularity to the continuity candidate Eduardo Frei as the Concertación began to weaken. BTI 2016 | Chile 4 The national election of 2009 was a historical landmark: the political right won the presidency in an electoral process for the first time since 1958. The right-wing Alliance for Chile (Alianza por Chile) – comprised of the moderate National Renovation party (Renovación Nacional, RN) and the more rightist Independent Democratic Union (Unión Demócrata Independiente, UDI) – triumphed with its candidate Sebastián Piñera. The Piñera government largely maintained the (generally business-friendly) policies of the Concertación, and also continued social policies promoted by Bachelet. Despite the 2010 earthquake (the overall effects of which the government managed successfully), the economy recovered quickly. Nonetheless, in 2011 Chile witnessed a surge in protests organized by students, indigenous organizations and citizens who feel their demands are not being met. The impact of these social movements on Chile’s transformation path has yet to be determined. In the context of the growing street protest on the one hand, and considerable political apathy on the other (expressed in an abstention rate exceeding 50%), the Concertación became the New Majority (Nueva Mayoría), with the inclusion of the Communist Party and other leftist groups. Its electoral success in the 2013 elections guaranteed the Concertación a majority in both houses of parliament and the return of Bachelet to government. Her government has promised a new constitution, the details of which have not been identified. BTI 2016 | Chile 5 The BTI combines text analysis and numerical assessments. The score for each question is provided below its respective title. The scale ranges from 1 (worst) to 10 (best). Transformation Status I. Political Transformation Question 1 | Stateness Score There is no real threat to the state’s monopoly on the use of force anywhere in its Monopoly on the territory. The state‘s authority to enforce laws is uncontested, despite the existence use of force of three types of threats against this monopoly: organized crime, such as drug 10 trafficking; anarchist groups responsible for bombings in Santiago; and some indigenous organizations in the southern regions of Bío Bío, La Araucanía and Los Ríos, some of which regularly carry out violent attacks. The first two threats pose a minimal risk to the state monopoly. Police statistics show that the phenomenon of drug trafficking, while troubling, is fully under the control of the institutions concerned. In the case of anarchist groups, although this happened to evolve into a higher level of violence in 2014, including some explosions
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