Cruising back to La Moneda

ON OCTOBER 27th, as Michelle Bachelet, clad in a shawl of green and gold, took the stage in a belle-__poque the...

ON OCTOBER 27th, as Michelle Bachelet, clad in a shawl of green and gold, took the stage in a belle-__poque theatre in a suburb of Santiago to launch her manifesto, the announcer introduced her as _the future president of Chile_. For once, the campaign triumphalism did not seem misplaced. Everything suggests that Ms Bachelet, a Socialist paediatrician, is heading back to La Moneda, the presidential palace, only four years after she left it. One question is whether she will win outright on November 17th, or be taken to a run-off a month later. The other, more important one is just how far she proposes to steer Chile to the left.

A survey by the Centre for Public Studies (CEP), the country_s leading pollster, put her within striking distance of outright victory. It suggested she would win 47% of the vote (or over 50% after discounting blank and spoiled ballots), more than 30 points ahead of her nearest challenger. Even some of her opponents concede that Ms Bachelet will probably win. Confidence oozes from her campaign team, installed in a rambling former hat factory restored in loft style, all bare brickwork and blonde wooden floors.

During her presidency of 2006-10 Ms Bachelet at first stumbled, bungling the launch of a bus rapid-transit system in Santiago and later being knocked by the world financial crisis. She recovered, partly by using Chile_s fiscal surplus to ease recession through emergency handouts and infrastructure projects. But after 20 years in power, her centre-left Concertaci__n coalition was weary and fraying. She was succeeded by Sebasti__n Pi__era, a billionaire businessman, who returned the centre-right to office for the first time since the end of General Augusto Pinochet_s dictatorship in 1990.

In many ways Mr Pi__era_s government has been a success. Despite slowing this year, the economy will have grown at an annual average rate of 5.5% under his stewardship, according to Felipe Larra__n, the finance minister. Unemployment, at 5.7% in the recent winter months, is the lowest in decades. Real wages are growing, inflation is contained and the public accounts are in good order.

Despite all this, the governing Alliance_s candidate, Evelyn Matthei, cannot even be certain of coming second in the election. The CEP poll gave her just 14% of the vote, not far ahead of two independents, Franco Parisi, a populist economist, and Marco Enr__quez-Ominami, a dissident former Concertaci__n member who won 20% of the vote in 2009. Ms Matthei_s best hope is that a change in the electoral rules_registration is now automatic, but voting voluntary_makes turnout uncertain and may render the polls unreliable.

The Alliance turned to Ms Matthei only in July, after choosing two other candidates who each self-destructed. The labour minister in Mr Pi__era_s government, she is experienced and capable. But she is from the more conservative of the Alliance_s two parties, and many Chileans associate her with a past they would rather forget. In a 1988 plebiscite, when her compatriots voted _no_ to another eight years of military rule under Pinochet, Ms Matthei voted _yes_. As head of the air force, her father was a member of Pinochet_s junta. (In an extraordinary twist of fate, he had been a close friend of Ms Bachelet_s father, a fellow air-force general who died of a heart attack after being imprisoned and tortured by the dictatorship in 1973.)

Seething in Santiago
Mr Pi__era has struggled to deal with demands for a fairer society, symbolised by large student protests that have persisted throughout his government. He responded by slashing the interest rate on student loans and tripling the number getting grants. But the spirit of protest has proved contagious. Hardly a week goes by without a march down Santiago_s main thoroughfare, the Alameda, demanding greater equality, better services or simply more money. Chile is experiencing a seething undercurrent of dissatisfaction, with calls to scrap the free-market model that has created Latin America_s most dynamic economy of modern times.

Ms Bachelet insists that reducing inequality will be her main commitment. _It_s difficult to have stability without social cohesion,_ she says. This involves three linked policy changes. To the students, she is offering _free_ (ie, fully taxpayer-funded) higher education, to be rolled out over the next six years. As a first step, the state would pay the tuition fees of the poorest 70% of students. She wants all secondary schools to operate on a not-for-profit basis (some, at the moment, are run as businesses), and would increase school budgets so that parents no longer have to top them up. The aim, she says, is to improve quality, which varies widely. But since she is offering state funding to rich and poor students alike, the higher-education plan is socially regressive, as a delegation from the OECD, a think-tank, noted on a recent visit. It is also costly, requiring extra funding of 1.5%-2.0% of GDP per year.

That money would come from tax reform. Ms Bachelet says she would raise the corporate tax rate from 20% to 25% over four years, cut the top rate of personal income tax from 40% to 35% and eliminate the Taxable Profits Fund (FUT), a mechanism that allows companies to defer indefinitely tax payments on reinvested earnings. This last measure has drawn howls of protest from businessmen, who say it will stifle investment just as economic growth is waning. Ms Bachelet_s advisers say that the FUT is abused by Chile_s rich to avoid paying tax on their personal incomes.

The third pillar of Ms Bachelet_s campaign is a new constitution to replace the one drawn up by Pinochet in 1980. Although amended 30 times, it still contains what she calls _padlocks_ against change. The electoral system of two-member constituencies tends to over-represent the right; some laws require a supermajority of four-sevenths. Because of the charter_s origins, it is reviled by the left. Ms Bachelet has floated the idea of a constituent assembly, which alarms many who believe the constitution requires reform rather than replacement. But she says that her preferred option is to win a big majority in Congress and use it to push through electoral and other reforms. She has brought the Communist Party into an expanded centre-left coalition. Even so, polls suggest the best she can hope for is a slender majority in both houses.

We want in
All this suggests that in a second presidency Ms Bachelet would govern from farther to the left than she did in her previous term. How much farther? _Her reading of society is based on the students,_ says Patricio Navia, a Chilean political scientist at New York University. They are more radical than ordinary Chileans, who want _to be incorporated into the benefits of economic growth, not to change the model,_ he says. That may be so, but many also want _the model_ to work better, especially the privatised health-care and pension systems. Ms Bachelet wants to tweak pensions. _Whatever we do, we_ll do it in a responsible way,_ she says.

That sort of low-key pragmatism is characteristic of Ms Bachelet. Her heart is firmly on the left. She is an atheist, and an unmarried mother of three children. After leaving La Moneda, she spent three years running the UN_s organisation for women. On the other hand, she is also consensual. Although most Chileans do not see her as a professional politician, she is in fact a skilful one. She is already playing down expectations of radical change. _Chile has done a lot of good things,_ she says. _You can be popular without being populist. I haven_t been promising paradise._

The Economist

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