New Chilean President Sworn In, Faces Reconstruction Challenges

President of the Reconstruction

Sebastián Piñera is being sworn in as Chile's new president today. The first democratically elected conservative president in 52 years (see Chile: 18 January 2010: Election 2010: Opposition Victory Produces Democratic Chile's First Conservative President), Piñera is taking over the reins of a country that has been severely damaged by the 27 February earthquake and the tsunami that followed (see Chile: 1 March 2010: Massive Earthquake Hits Chile, Death Toll Rises Above 700). Reconstruction of the damaged areas will be the first challenge for his government. The new president said in the aftermath of the catastrophe that his "will be the government of the reconstruction" and promised to hand private investment an important role in this process. The copper industry, the main source of the government's revenue through state-owned copper giant Codelco, was practically untouched by the earthquake. However, the fishing, wine, and paper and pulp sectors have been severely damaged by the natural disaster, the cost of which could climb to US$30 billion (see Chile: 5 March 2010: Government Lowers Official Chilean Earthquake Death Toll to 279; Reconstruction of Affected Areas Will Take Years). Piñera has already recognised that his early promises to deliver 6% annual GDP growth rates during his term will have to be reassessed. However, Chile's solid economy and strong institutions point to a rapid recovery, as already forecast by the country's central bank (see Chile: 8 March 2010: Chilean Central Bank Predicts Rapid Recovery After Earthquake). Additionally, if Piñera's government needs alternative sources of funding, Chile is in a very good position to request the help of international financial institutions such as the World Bank or the International Monetary Fund (IMF). The country's credibility in international markets, its rigorous macroeconomic policy, and its open markets will contribute to a dynamic recovery, which is sure to boost employment and growth during Piñera's mandate. However, his biggest challenge is to win over the country's poor, who still support the outgoing centre-left Concertación coalition, which had been in power for 20 years until the 2010 election.

Predecessor Remains Hugely Popular

The real challenge for Piñera will be to live up to his hugely popular predecessor, Michelle Bachelet. Contrary to the reports of most international and domestic media, Bachelet was able to retain extraordinary popular support despite criticism of her government in the aftermath of the earthquake (see Chile: 10 March 2010: Polls Make Outgoing Chilean President Most Popular Politician in History). An agnostic socialist and a divorced mother of three, Bachelet was the first female president of Chile and leaves office with high popularity ratings. According to the last poll, taken from 3 to 6 March (days after the quake) by reputable consultancy firm Adimark, Bachelet was Chile's most popular ever president with an 84% approval rating (and a 75% approval rating for her management of the earthquake crisis). According to the poll, which had a margin of error of 3% and covered 1,129 people interviewed by telephone, Bachelet's popularity rose among the working and middle classes but deteriorated among Chile's elite. This strong support base is sure to help her if she decides to run for the presidency again in 2013 and her followers will be watching Piñera’s social policies carefully. The Chilean working class, which has benefited from years of social programmes under the Concertación government, will remain sceptical of Piñera's conservative coalition. This was evident when Piñera, a wealthy entrepreneur, announced his intention to inject private capital into state-owned Codelco, a move that sparked immediate criticism from the mining unions (see Chile: 20 January 2010: Newly Elected President Upsets Copper Trade Unions in Chile). Bachelet claimed yesterday in her leaving speech on national television and radio that during her four years in office her government had "delivered important advances in social justice", something that her supporters will continue fighting for. Piñera will have to look to soften the scepticism of the Chilean working class while at the same time living up to the high expectations of the wealthy elite.

Outlook and Implications