LIMA, PeruSpain’s political transition was not completed until the heirs to those who had governed under Francisco Franco won free elections and proved that they had killed their ghosts. Chile’s own 20-year old transition will be completed if businessman Sebastian Pinera, who finished first in the recent presidential election, defeats the governing center-left coalition in the runoff on Jan. 17.
In any country, the success of a democratic transition after a pro-market military dictatorship brought about by radical socialism depends on the socialists embracing the rule of law and private property rights, and on the heirs of the old regime taking the long passage through purgatorya “crossing of the desert,” in Charles de Gaulle’s expression, from which they emerge chastised.
The first part of Chile’s transition was successful. The socialists learned the lesson of Salvador Allende, whose tragic government precipitated Augusto Pinochet’s bloody coup, and preserved the economic environment that had set Chile apart from the rest of Latin America. They further liberalized trade; poverty was reduced to 13 percent of the population.
But after four consecutive center-left governments, the coalition lost steam and began to engage in unhealthy customs typical of any group convinced that it is destined to rule forever. Reform stalled. A recent study by the consulting firm McKinsey & Co. indicates that labor productivity went from an average rate of growth of 5.9 percent per year in the 1990s to a dismal 0.9 percent this decade.
Chile’s economic progress generated expectations that the governing coalition was unable to meet. People started demanding better quality of service from a state that had become pachydermal and which made a mess of public utilities, most notably Santiago’s transportation network. Student riots brought to light the mediocrity of the country’s education system.
Chileans were hungry for change. The discriminatory process for nominating the government’s presidential candidate triggered the emergence of 36-year-old Marco Enriquez-Ominami, who left the Socialist Party to become a political sensation as an independent candidate. He declared himself a “libertarian” but mixed that anti-establishment sentiment with more conventional stuff, particularly his weakness for Latin American left-wing populists.
More important was the new strength found by Pinera, who had sought the presidency before. A billionaire businessman envied for his success, Pinera comes from the more moderate of the two center-right parties and is known for having campaigned in favor of a “no” vote in the 1988 referendum in which Pinochet attempted to perpetuate his regime. Pinera has embraced Chile’s modern youth, which until recently voted overwhelmingly for the left in great part because the right continued to adhere to very conservative positions on social issues with support from the Catholic Churchit took the governing coalition many years to legalize divorce. Although the Independent Democratic Union, or UDI, the main right-wing party, controls one-fourth of the Chamber of Deputies and constitutes a powerful social base, Pinera has expanded his support, including some Christian Democrats.
With 44 percent of the vote in the first round, Pinera came in 14 points ahead of former President Eduardo Frei, the government’s candidate. Enriquez-Ominami’s votesa respectable 20 percent, mostly of a center-left persuasionwill be decisive in the runoff. According to the polls, Pinera has a strong chance of luring nearly 30 percent of them. A key economic adviser to the young contender has just joined Pinera’s campaign.
Chile seems on the verge of closing its prolonged political transition. Its citizens yearn for the rejuvenation of a system that has become riddled with vested interests and rests on its laurels. A new wave of reform is needed in order to further capitalize the economy, vivify civil society and shake up the government.
If he wins, Pinera will need to be extremely mindful of the danger that his personal interests will become entangled with state affairs. When I had the chance to talk to Pinera in Buenos Aires recently, he seemed acutely aware of the risks of the Berlusconi syndromethe inability of Italy’s prime minister to clearly separate politics and business.
Chileans are ready to give their economy new impetus with a view to hopefully doubling a per capita income that, at $14,000 annually, is still below its potential. And Latin America is eager to have Chile join the ranks of those who want to rescue the continent from the populist autocrats who have given the impression that they had a grip on the hemisphere’s agenda.
Alvaro Vargas Llosa
Alvaro Vargas Llosa is Senior Fellow of The Center on Global Prosperity at The Independent Institute. He is a native of Peru and received his B.S.C. in international history from the London School of Economics. His weekly column is syndicated worldwide by the Washington Post Writers Group, and his Independent Institute books include Lessons From the Poor: Triumph of the Entrepreneurial Spirit, The Che Guevara Myth and the Future of Liberty, and Liberty for Latin America.
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