Political Risk Latin America Blog @PolRiskLatam

Education in Chile: We want the world

Posted in News and Articles, Political Risk by politicalrisklatam on August 11, 2011

by Patricia Navia for The Economist, August 11th, 2011.

A trial of strength between students and the government.

It began on August 4th with the metallic clink of a few pots and pans. By nightfall, thousands of people were on the streets of Santiago banging kitchenware, a form of protest last heard under the dictatorship of General Pinochet. This time the cacerolazos, as they are called, are being staged in the name of educational Utopia—and in response to a cack-handed government ban on marches.

Chile’s school system is the least bad in Latin America, according to the OECD’s PISA tests, which compare educational attainment across countries. But that does not make it good. And the overall performance hides huge disparities. Analysis done in Chile of the test results in the 65 countries that took part finds that it ranked 64th in terms of the variance of the results according to social class. Rich pupils get good private education; poor ones are condemned to underfunded, dilapidated state-funded schools.

This “educational apartheid” as Mario Waissbluth, a campaigner, puts it, is widely blamed for the fact that Chile remains a highly unequal society, despite its dramatic progress over the past quarter of a century in reducing poverty. “The kids from the posh suburbs study in those suburbs, go to university in those suburbs, get jobs as company executives in those suburbs and employ friends from the schools they went to themselves,” says Mr Waissbluth.

The centre-right government of President Sebastián Piñera agrees. Chile inherited from the dictatorship a voucher system under which the government pays money to the school of the parents’ choice. In November the government unveiled a plan to increase the value of the voucher, especially for the poorest children. As well as trying to attract better teachers to state schools, the government will set up 60 lycée-style “schools of excellence” aimed at bright children from poor families.

Students and teachers responded by demanding the abolition of all for-profit education. After they staged big marches along the Alameda, Santiago’s main thoroughfare, Mr Piñera last month sacked his unpopular education minister. The government also said it would draw some $4 billion from its reserve fund of windfall copper revenue to pay for better schools. (continue reading… )



Cabinet Changes in Chile: Piñera Reshuffles the Deck

Posted in News and Articles, Political Risk by politicalrisklatam on July 20, 2011

by Roque Planas for Americas Society / Council of the Americas, July 19th, 2011.

Facing student protests, striking copper miners, and an ongoing energy controversy, Piñera shuffled his cabinet on Monday for the second time this year. Piñera ordered eight cabinet changes in all, but all but two ministers will trade places with others. The two new additions—Senators Pablo Longueira and Andrés Chadwick—both hail from the Independent Democratic Union, the more conservative party in Piñera’s two-party coalition. With the cabinet shuffle, Piñera hopes to address the social unrest that has pushed his approval rating down to 31 percent June from its peak of 63 percent in October, following the rescue of the 33 trapped miners.

Education Minister Joaquín Lavín’s move to the Ministry of Social Planning aims to defuse a standoff with tens of thousands of student protesters that has dragged on since April. Lavín’s approval rating plummeted by 24 points to 46 percent, according to Adimark, and Chileans now rate education as the area the Piñera administration’s weakest spot. Piñera proposed a $4 billion investment to finance scholarships and other investments in education, but students protesters rejected Piñera’s plan out of hand for opening the door to allowing for-profit schools, which is currently prohibited by law. Lavín’s departure from the Education Ministry pleased student protesters, who continue to occupy at least 100 hundred high schools and universities.

Meanwhile, Mining and Energy Minister Laurence Goldborne traded places with Public Works Minister Hernán de Solminihac in a move that some saw as a reward for Goldborne. Public confidence in Goldborne soared last year because of the role he played in rescuing the 33 trapped miners. His move to the Public Works Ministry comes just days after state copper company CODELCO went on a 24-hour strike—the union’s first in two decades. By moving to Public Works, Goldborne takes on a position of equal or greater importance—the ministry leads reconstruction from the 2010 earthquake—while avoiding politically painful confrontation with the copper miners’ union, reports the Financial Times. He also avoids continuing to associate himself with the controversial HydroAysén dam project, which Piñera approved despite large-scale environmental protests that drew tens of thousands to the streets. (A Chilean court halted construction of the $3.5 billion project on June 20, after opponents filed an injunction.) Goldborne is also widely viewed as a leading conservative possibility for the 2014 presidential elections, in which Piñera will have to sit out due to a constitutional prohibition on consecutive reelection. In a column for La Tercera, political scientist Patricio Navia referred to Golborne’s move as “the official beginning of his presidential run.”  (continue reading… )

Chile’s middle class people power

Posted in News and Articles, Political Risk by politicalrisklatam on July 19, 2011

by Janie Hulse for Financial Times – Beyond Brics, July 19th, 2011.

It all must seem so unfair. Chile is one of the world’s most politically stable countries. The economy is growing gangbusters. And yet Sebastian Piñera, the president, is increasingly unpopular.

His approval rating has sunk to 31 per cent. The country has been riven by strikes at Codelco, the state-owned copper miner, and elsewhere; it has been shaken by environmental protests over a multi-billion-dollar hydroelectric project in the south of the country; and it has been surprised by massive student protests – in June, some 80,000 students took to the streets, the largest such gathering since the transition to democracy in 1990. What to do? Piñera’s response: re-shuffle eight ministers in his 22 strong cabinet.

The reshuffle, the second in his government, is a sign that Piñera is listening to the country and aware of the need for change, although there are only four points about the shuffle worth noting.

First, two Senators from the governing party’s coalition partner, the conservative UDI, have been given positions as economy minister and government spokesman. That could mute UDI criticism and make it easier for Piñera to govern.

Second, the ever-popular Laurence Goldorne, who won his spurs during the celebrated government rescue of 33 trapped miners, is moved from energy and mining to public works – which gained higher visibility following last year’s major earthquake. No change in mining policy is expected.

And, third, Felipe Larraín remains in the post of finance minister. Financial markets will be relieved. (continue reading… )


How the mighty have fallen

Posted in News and Articles, Political Risk by politicalrisklatam on June 16, 2011

by The Economist – Americas View, June 14th, 2011.

Voters famously have short memories. Despite their reputation as a sober, well-governed lot, Chileans are no exception. Just six months ago Sebastián Piñera (pictured), the president, was riding high after the miraculous rescue of 33 miners who had been trapped underground for ten weeks. According to Adimark, a pollster, his approval rating reached 63% following the successful operation. The company’s June survey painted a far grimmer picture for Mr Piñera: his support has dropped to just 36%, the lowest figure since he took office in March 2010. Meanwhile, his disapproval rating hit 56%, the highest mark for any Chilean president since the return of democracy in 1990.

Mr Piñera’s poll numbers have tumbled primarily because of his support for the Hidroaysén electricity scheme, a plan to build five dams on two rivers in the pristine wilds of Patagonia, which would flood 5,900 hectares (14,573 acres) of nature reserves. His government approved the project on May 9th, failing to anticipate staunch opposition from environmentalists. More than 30,000 people marched last month through Santiago, the capital, urging the government to halt the project.

The Hidroaysén case might not have unnerved the public quite so much had it not fit with their preconceived notions of Mr Piñera’s management style. Unlike Michelle Bachelet, his popular, consensus-minded predecessor, Mr Piñera is a former business tycoon. He has centralised decision-making in his own office and rarely goes through a broad consultation process before making up his mind. As a result, when he approved the dams, many Chileans suspected that he had become too cosy with Endesa, the Spanish company leading the construction. And since his ministers are seen to have little authority, Mr Piñera himself has become a lightning rod for all criticism of his government. (continue reading… )

Obama Visit, a Boost for Piñera

Posted in News and Articles, Political Risk by politicalrisklatam on March 22, 2011

by Kenneth Bunker for Americas Quarterly Online, March 21st, 2011.

President Obama’s visit to Chile coincides with President Piñera’s completion of the first year of his four-year term. Although his administration has been highly effective at rebuilding the massive damage of the 2010 earthquake and tsunami, Piñera’s approval ratings are at their lowest level yet. Almost immediately after being sworn in, Piñera took a hit in the polls.

The unnecessary delay in selling two of his most emblematic companies (a television station, CHV, and LAN Airlines) sparked debate on potential conflicts of interest. Although he was able to regain some support after the successful rescue of the trapped miners, a popular revolt triggered by the decision to raise natural gas prices in the south sent approval ratings in a downward trajectory.

Though Piñera later sold his companies (or provisionally signed them over to non-profit organizations) and promptly announced that gas prices would only marginally increase, several other minor unforced and unpopular decisions have underscored his first year in office. Some of these errors can be attributed to the difficulties of running a country ruled by the opposition for the past 20 years. But others should be understood as part of Piñera’s natural entrepreneurial character, which naturally entails a certain amount of risk-taking. (continue reading… )


Chile’s leader ends first year with mixed results

Posted in News and Articles, Political Risk by politicalrisklatam on March 11, 2011

by Eva Vergara for The Washington Post, March 10th, 2011.

In the year since Sebastian Pinera assumed Chile’s presidency, he has basked in global praise for bringing Chile back from a disastrous earthquake and leading the remarkable rescue of 33 miners stuck deep underground. Chile’s economy is booming and jobs are returning.

Yet, all is not well for the billionaire businessman who next week welcomes Barack Obama on only the third bilateral visit of a U.S. president to this South American country in 50 years.

For better and for worse, with his impulsive character, taste for calculated risks and a leadership style befitting a tychoon accustomed to fast results, Pinera is transforming Chilean politics after two decades of center-left governments. (continue reading… )


Reviving Codelco

Posted in News and Articles, Political Risk by politicalrisklatam on October 22, 2010

by The Economist, October 21st, 2010.

After rescuing the miners, the state copper giant has other work to do.

During last year’s election campaign, Sebastián Piñera, who became Chile’s president in March, often criticised Codelco, the country’s state-owned copper company, for its inefficiency, griping over its stagnant output and climbing costs. Yet it was engineers from Codelco who stood beside him this month as the 33 miners trapped since August 5th in the privately owned San José copper and gold mine in northern Chile were hoisted to safety.

Other big mining companies helped with advice and equipment. But Mr Piñera looked to Codelco, which runs the world’s biggest underground copper mine in El Teniente, to lead the rescue operation. Perched 2,500 metres up in the Andes south of Santiago, El Teniente is a far cry from the dark, crumbling warren of the San José mine. Its 2,400km (1,500 miles) of galleries, with their computer-equipped offices and canteens wafting the smell of food into the surprisingly fresh air, are meticulously organised and home to some of the world’s most advanced underground mining technology.

Codelco’s foundations were laid in 1971, when Salvador Allende, a socialist president, nationalised Chile’s American-owned mines. Although General Augusto Pinochet toppled Allende in a coup two years later and then instituted free-market reforms, the dictator did not reprivatise the mines. Instead he merged them into a single state-owned enterprise, and required it to hand over 10% of its export revenues to the armed forces. Today, Codelco still mines over a tenth of the world’s copper, but it has seen its share of Chile’s output dwindle from 75% in 1990 to 32% last year. (continue reading… )

Piñera seals in Paris wide-ranging “strategic alliance” with France

Posted in News and Articles, Political Risk by politicalrisklatam on October 21, 2010

by Merco Press, October 21st, 2010.

Chilean president Sebastian Piñera announced Wednesday in Paris a wide-ranging “strategic alliance” with France following a meeting with President Nicholas Sarkozy. Piñera arrived Tuesday from London and later in the week is scheduled to travel to Germany.

“Relations and links between France and Chile are going to witness better days ahead”, said Piñera at the Palais Elysée. “We have reached agreements to work in different sectors and convergence in international affairs”. France promised to help Chile with the reconstruction from the deadly and devastating February earthquake by participating in the reestablishment of public services and an orderly urbanization of the struck areas.

The two countries are committed to work in the development of renewable energies, of which France leads in several options, and Piñera announced that Chile “must prepare for the world of nuclear energy, although no decision will be taken during this mandate”.

As part of the agreement Chile will be sending forty students to specialize in the development of nuclear energy and “we hope that France continues to invest and develop in that sector in Chile”. Regarding education, student exchanges will be promoted and Chile expects to have 1.500 on scholarships in French universities by 2015. (continue reading… )

Can Chile follow the miracle rescue of 33 miners with a Chilean economic miracle?

Posted in News and Articles, Political Risk by politicalrisklatam on October 15, 2010

by Anthony Harrington for QFinance, October 15th, 2010.

As the world watched the incredible sight of Chile’s 33 miners emerging, one by one, from what might so easily have been their stony tomb half a mile underground, there was a real sense that this was also the opportunity for the country as whole to shed the darkness of the Pinochet years and to be seen as a modern, democratic country with a thriving economy.

In fact in his first interview with the BBC after the rescue, Chile’s billionaire President Sebastián Piñera said that his goal now was to make Chile the first Latin American country to defeat poverty and underdevelopment. He went on to say that from now on, to say that something was done “the Chilean way” would mean that it was done right, with team work and application.

Certainly, anyone who watched through the long hours, as miner after miner was brought to the surface after their 69 day ordeal underground, to be ecstatically greeted by family, friends and strangers alike, could not but have been impressed with the focus, dedication and complete absence of ego displayed by all concerned, and particularly by the country’s President. “Chile is not the same country that it was 69 days ago. We are more respected in the world,” he said.

Later this month (October) Piñera has the task of pushing his 2011 budget proposals through the Chilean legislature. He will be able to draw considerable strength and comfort in this process from the latest IMF report on Chile, published at the end of September, which praised the resilience of the country’s economy. (continue reading… )

Chile’s President Sebastián Piñera, on the “Renaissance” of the Chilean Economy

Posted in News and Articles, Political Risk by politicalrisklatam on September 22, 2010

by Carin Zissis for Americas Society/Council of the Americas, September 22nd, 2010.

We want to create a society of opportunities,” said Chile’s President Sebastián Piñera during September 22 remarks at the Americas Society and Council of the Americas. During his presentation Piñera outlined his administration’s goals to combat poverty, boost economic growth, and improve development. As AS/COA Honorary Chairman William R. Rhodes noted in his opening remarks, the new Chilean president was forced to “hit the ground running” when he took office in March, a few short weeks after the country was battered by the fifth largest earthquake on record. In spite of that disaster that cost the country $30 billion (or 18 percent of Chile’s GDP), Piñera said his government’s goal is to achieve 6 percent GDP growth during his four years in office.
The president delivered the speech less than a week after the Chile’s bicentennial and said “we want to take advantage of the spirit” felt in the country during the celebration. Looking at more recent history, he stressed that the time has come for Chile to wake up from an economic slumber. He compared Chilean growth between 1986 and 1997—when GDP rates averaged 7.8 percent—to the 1998 to 2009 period, when growth rates fell to 3.4 percent. “We are living a real renaissance in our economy,” said Piñera, who pointed out that Chile is now on track to rank twenty-fourth in the world, second in Latin America, and first among OECD countries in terms of growth.
“We want to create a society of opportunities,” said the president, who forecast that Chile would see the creation of 300,000 jobs in 2010 and one million jobs by the end of his term in order to combat poverty and promote entrepreneurship. Moreover, in the first four months of the Piñera administration, real salaries rose by 2.1 percent, unemployment dropped during the second quarter from 9 percent to 8.3 percent, and crime related to drug trafficking dropped while arrests rose.  (continue reading… )