Frédéric Mertens de Wilmars
Coordinator of the Degree in International Relations at the European University of Valencia
Last Monday, 20 December, the markets sanctioned the victory of the left in Chile’s presidential elections. In fact, the Santiago stock exchange opened with a significant fall of 6.83% and rebounded to 6.18% at the close. There is no shortage of reasons for the fall, such as the uncertainty generated by this ideological change of direction, but also the fragmentation of the Chilean left.
As one of the youngest elected presidents in the world (35 years old), Gabriel Boric has the disadvantage of his age to convince all his compatriots – 44% of whom voted for the extreme right – and, above all, the Chilean economy of his ability to “bring certainties”. Moreover, by basing his election on the promise of the establishment of a welfare state, the young president faces major difficulties in rethinking the socio-economic model of a country considered the laboratory of Latin American liberalism that has become the most unequal system in the OECD.
Numerous questions loom on the immediate horizon: the ability to understand the vital role of the private sector in the new power’s social programmes; and the feasibility of his fiscal reform in order to involve the largest fortunes in his programme for better access to health, education and the hitherto completely privatised pension system.
Towards “another Cuba” in Chile?
The question refers to the time of the Allende government (1970-1973), which was overthrown by Pinochet, who compared it to Fidel Castro’s regime. Even if Gabriel Boric, at the head of a coalition between moderates and extremists (communists), orients his political programme towards greater state intervention in the economy, a radical change seems unlikely. Indeed, already in the political arena, Boric will find it difficult to impose his social agenda in the face of a bicameral parliament with clear balances that can act as a counterweight to more radical leftist policies.
In addition, Chile’s economic situation is in a delicate situation. GDP has artificially increased from 11.5% in 2021 due to state subsidies and authorised withdrawals in private savings. Growth is expected to be zero in 2023. In fact, the ratio of public debt to GDP is expected to rise sharply under the new government while lingering uncertainty regarding the new constitution being drafted contributes to pressure on Chilean financial markets. Such a constitution – one of the main demands of the 2019 social movement – replaces the current one dating from the Pinochet dictatorship (1973-1990).
In other words, although, in its constitution, Chile becomes a welfare or “social and democratic” state like the Spanish state, Boric’s projects are confronted with the economic reality imposed by a liberal economic system well anchored in the country.
A continent to the left… of Joe Biden
Cuba, Argentina, Mexico, Nicaragua, Venezuela and Peru have already expressed their support for the new Chilean president. It is the entire Latin American left in power, including Brazil’s charismatic former president, Luiz Inacio Lula da Silva, who is tipped to win the 2022 presidential election. Costa Rica and Colombia are also set to vote presidential votes to the left next year. With Chile and Brazil almost certainly moving to the left, it is (almost) an entire continent that ideologically, at various levels, is moving to the left… of Joe Biden. With Justin Trudeau, Canadian Prime Minister and the Latin American cone, the head of the White House is very much alone in the face of this continental leftist wave.
With the Chilean elections, the contrast that exists on this continent between extreme left-wing governments (Maduro’s Venezuela) and extreme right-wing governments (Bolsonaro’s Brazil) is striking. A second contrast distinguishes states where the conditions of the electoral process are highly undemocratic (as in Nicaragua, where the Sandinista Daniel Ortega was re-elected head of state on 7 November without any opposition) and others where the alternation is taking place peacefully, as in Honduras where the nomination of the left-wing candidate, Xiomara Castro, against her right-wing opponent on 28 November was carried out with respect for the law.
Evidently, the shadow of the United States covers the entire Latin American continent. We knew that Trump was very close to Bolsonaro, we suspect that Biden has a very different vision. What is the current US president’s approach to his southern neighbours? Beyond his administration’s first problem with the region, which is the influx of illegal immigrants, does the new Chilean president, like his Latin American counterparts, have a geopolitical project in the face of Chinese advances in Latin American countries?
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