Brazil & Southern Cone - November 2010 (ISSN 1741-4431)
CHILE: Piñera gets into his stride
On 13 October, over 1bn people around the world saw TV pictures of the rescue of the first of the 33 miners trapped in a Chilean mine since 5 August. The huge media furore over the human interest story of the trapped miners has overshadowed what the saga shows about Chile. The energy and technical expertise that went into the rescue, which was achieved ahead of schedule, demonstrates why Chile is Latin America's best credit risk (A+, the same as China, Cyprus and Italy).
The sense of national unity generated in Chile by the saga is a tribute to President Sebastián Piñera and contrasts with the recriminations and political-point scoring which followed the earthquake that struck the country on 27 February, in the final days of the previous Concertación government. Piñera's subsequent European tour, immediately after the rescue, gave him a prominence and a reception that few other Chilean leaders have enjoyed.
It is worth noting that while the eyes of the world were focusing on the San José mine, the government clinched a deal on 12 October with the centre-left Concertación (which had ruled Chile from the end of the Pinochet regime in 1990 until Piñera's election this year) to increase mining royalties to generate cash to pay for the earthquake reconstruction. Currently, mining companies pay a royalty of between 4% and 5%. The reform lifts this to a levy of between 4% and 9% on operating margins of 35% to 70% between 2010 and 2012. From 2018, however, the royalty rises to between 5% and 14% on operating margins of between 35% and 100%.
The royalty deal, and the government's successful negotiations (on 8 October) to end a long hunger strike by 35 Mapuches, demonstrate that Piñera's government, which only took office in March, has worked out how to harness political momentum. This makes a striking contrast to the early days of the last Concertación government led by (the eventually hugely popular) President Michelle Bachelet, which ran into a series of corruption and implementation problems, most notably over the Transantiago public transport scheme.
Piñera's increasing assurance and confidence domestically is translating into much more interesting role for Chile in the region. Like Bachelet, Piñera has had difficulties with President Hugo Chávez of Venezuela, but unlike Bachelet he has, essentially, agreed to differ with Chávez .
Nevertheless, Piñera has signed up for the Union of South American Nations (Unasur), which is one of Chávez 's pet projects. This is significant because Brazil, Colombia, Paraguay, Suriname and Uruguay have all yet to ratify their membership of Unasur. Admittedly, Colombia and Uruguay have said that they will, but until they do the new organisation has no legal standing.
It is also significant that Piñera was the first Latin American president to show personal solidarity with President Rafael Correa of Ecuador, after the alleged attempted coup against Correa on 30 September. Piñera visited Quito on 10 October, ahead of President Evo Morales of Bolivia, who went on 12 October. Morales then intended to fly down to Chile to greet the trapped Bolivian miner, Carlos Mamani, when he came to the surface at San José. Mamani was the fourth miner to be released and arrived at the surface hours before Morales got to Chile. This prompted some severe criticism of Morales from Mamani's family.
Piñera may be positioning Chile as a more representative face of Latin America than Brazil, the region's economic powerhouse. Piñera's first speech to the UN General Assembly in September touched on issues such as the region's multiple ethnicities, but did so in a much less confrontational way than the region's more radical presidents. Equally significantly, Piñera's government has, unlike Brazil, recognised the new, elected government in Honduras. This move, coupled with the strong denunciation of the Ecuadorean 'coup', underlines Piñera's credentials as a democratic pragmatist.
- Piñera's approval soars