In the aftermath of the Chilean primary elections on July 18 to elect two presidential candidates, one from the left and one from the right, the stock market rose by nearly two points. For the first time in months, the market has breathed with the defeat of Communist Party candidate Daniel Jadue for Frente Amplio candidate Gabriel Boric. However, a few days later, the president of the Santiago Stock Exchange declared that “in candidate Boric’s speech there are a number of dangers”.
Chile is changing and this will not only affect the financial system. The country admired for its institutional stability and for the public policies implemented over the past three decades has turned into a country where a large part of the citizens wish to reform the development model in depth. “It’s not 30 pesos, it’s 30 years,” said a lady when asked about the causes of the social epidemic of October 18, 2019.
The South American country is facing an inflection point which will most likely lead to modifying its development strategy and replacing the main aspects inherited from the military dictatorship: the political constitution and the economic model based on a subsidiary state. After the social explosion, the path of this transformation was marked by three institutional processes.
Challenging the model, social explosion and electoral process
Chile has succeeded in generating a development model with lights and shadows. Although poverty had been reduced from 45% in 1989 to less than 15% two decades later, in addition to strong economic growth, especially in the first decades since the return to democracy, the failure to meet expectations of ‘much of the population set off in questioning the model. This has manifested itself in an unprecedented increase in conflicts between rich and poor, as evidenced by opinion studies such as the 2019 UC Bicentennial Survey.
In this context and after the social explosion, the first institutional process in this regard was the plebiscite of October 25, in which 78% of the population approved the creation of a new Magna Carta. It was also approved that the composition of the constituent assembly responsible for drafting the new constitution would not include parliamentarians, in a clear rejection of traditional political elites.
The second institutional process was the Constituent Assembly election in mid-May, where many independent candidates were elected – away from traditional parties – seeking to implement structural reforms in the country. Indeed, about half of the constituencies, out of a total of 155, seek to implement profound or even radical changes.
Faced with the electoral disaster of the ruling party, President Piñera publicly declared that the citizens had sent a clear message to the government and to all traditional political forces: “we are not in tune with the demands and aspirations of the citizens”.
The recent July 18 primary elections were the last institutional process in this regard, in which more than 3 million people elected two young non-militant candidates from traditional parties to run for president on November 21. On the left, Gabriel Boric, the representative of the “J’approuve la Dignité” alliance, born in January 2021, which brought together many movements and left-wing parties, including the Communist Party and the Frente Amplio, won. While on the right, the independent candidate without party affiliation, Sebastián Sichel of “Chili Vamos” was chosen to run for the presidency.
Will Chile experience structural changes?
Everything indicates that yes, it is the most likely path. One of the changes could be the system of government. Some speak of the adoption of parliamentarism, others of a possible French-style semi-presidentialism, while according to surveys by the Social Studies Program of the Pontifical Catholic University of Valparaíso, a significant percentage prefers to pursue presidentialism. , but with greater parliamentary power. .
They could also change the development model and move from a subsidiary state, where the state does not undertake activities which, in theory, are properly carried out by individuals, to a variant of a Chilean-style welfare state. . The sum of these transformations would in turn bring about changes in foreign policy and Chile’s integration into the world.
Chile has gone from the election of Sebastián Piñera to the presidency a few years ago to a country in which citizens demand greater state presence, more sustainable development and more social rights. But these demands, in turn, pose a new and enormous challenge: How will this “welfare state” be financed?
In addition to questions, for many analysts, Chile arouses a lot of optimism and hope, and is an example of a democracy where change is channeled through institutional mechanisms. For others, this rupture represents the end of stability and dilutes the possibility of transforming Chile into a first world country.
Only time will tell if Chile will once again become an institutional model for the world.
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