Velasco's feelers

Former Finance Minister Andrés Velasco is putting out presidential feelers. In this week's Que Pasa magazine, Velasco indicates he is considering a presidential run. This is interesting in several respects. First, he is close to Michelle Bachelet, so his position raises questions on whether Bachelet is serious about returning to national politics. What is more likely is that she is lukewarm, and if there is another serious Bacheletista candidate, she'll pass.

Second, Velasco is apolitical -- at least he is not affiliated with any political party. Clearly Concertacionista, Velasco can claim, even more so than Bachelet did, to be independent. As public opinion polls consistently show the low levels of public support for political parties, this could be a plus.

Third, Velasco has a good track record. While it's true that many on the left of the Concertación blame him for having been too stingy, most rational observers recognize that his frugality during the good times allowed Chile to implement an important sitmulus when the 2008 crisis hit, providing a cushion for the economy and a boost for President Bachelet. This has contributed to...

Fourth, Velasco has an international reputation. Not only was he hailed by finance minister colleages for his handling of the crisis, since leaving office Velasco has been selective in his public appearances in Chile and abroad. Most recently, the 15-point paper he delivered with Francisco Javier Diaz at the Progressive Governance Summit in Norway was very well received (my own paper with Francisco Diaz can be found here).

Fifth, while he is no spring chicken, Velasco represents a new generation in Chilean politics. At 50, he is a generation younger than most of the well known leadership that still clings to the Concertación (Lagos, Insulza, etc.), and a decade younger than his former boss, Bachelet. He may still be too old to really attact the kids on the street, who like the hippies, don't trust anyone over 25, but for a country where politicians tend to be grey haired, Velasco represents a change.

Velasco is accused by many of being too academic, but I have seen him deliver speeches where he can turn on the political charisma. The real question is whether he has a plan for programmatic and ideological renewal of the Concertación. He won't win on his CV alone.
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Kaa and the Chilean Jungle

Less than a year ago the foreign press was filled with glowing reports on the heroic Chilean miners and the heroic efforts by the heroic minister of mining and his determined taskmaster, Sebastian Piñera, to rescue them. After the rescue, the magic combination of determination, top-notch engineering, political will, and luck was dubbed by the government 'the Chilean Way'.

The contrast with this report which appeared a few days ago in the New York Times could not be greater. The foreign press has caught on to the La Polar case, and, more importantly, to the general unscrupulous practice retailers use to sell credit, through which they make much more money than by selling doodads and trinkets imported from China.

Several things are worrying about the report:

1. That the rest of the world is noticing that the Far West kind of capitalism that was sold to Chileans and other Latin Americans has exhausted the stage which brings benefits. The true costs are starting to show.

2. While the US and Europe went to through a similar period, they also had civil and political societies prepared to correct the mistakes through regulation. There is little hope that can be done (at least in Chile).

3. That foreign investors could begin to make the connection between the kind of business practices being employed towards consumers and those which they may encounter in the broader business community.

Without wishing to employ Latin American stereotypes, it's a jungle out there. Beware of Kaa.
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The Moneda Shuffle

The much anticipated cabinet shuffle finally took place today, and it was major surgery for a government suffering from chronic illness. I commented on the shuffle on the radio this evening. Basically I mentioned the following points:

1. It was clear the Education Minister Lavin had to go. Rather than eliminate him completely, he was moved to the Ministry of Planning, in charge of social programs. Because of its high profile, high budget, and social implications, the UDI has insisted on holding on to this ministry. Unfortunately, making room for Lavin meant removing a very good guy, Felipe Kast, who was doing a good job. Kast deserved better.

2. Into Education went former Justice Minister Felipe Bulnes, who was also doing a good job. Education is a prize of sorts, as his good performance led the president to ask him to resolve the government's most important headache. However, Education is a ministry that tends to eat up its ministers. If Bulnes does well here, he becomes presidential material.

3. Two old-school UDI politicians are brought in: Pablo Longueira into Economy and Andres Chadwick becomes the government spokesman. These are seen as signs that the government recognizes its need to strengthen the way it does politics... the politics of politics, as it were. However, most observers are puzzled as to why Longueira was put in Economy -- not his strong suit. And the most obvious comment on Chadwick is that he is the president's cousin. The optics, at the very least, are not good.

4. Laurence Golborne, the hero of the miners' rescue, is moved from Mining and Energy to Public Works. This is a bit of a reward for Golborne, in that he no longer has to deal with the environmentalist opposition to Hydroaysen and takes over a ministry which offers the opportunity to inaugurate roads and bridges. It is the ministry that Ricardo Lagos used to leverage his popularity straight to the presidency.

5. Many were surprised that Interior Minister Hinzpeter survived, as he has been a target of the UDI since day one, and has had a few major missteps. He comes out strengthened by the vote of confidence the president has in him. Piñera has made it clear that Hinzpeter is in for the long haul, and has paid a price in other ministries to keep him. The UDI, in general, emerges as the dominant party in this government. No more talk of new right.

6. Just as Hinzpeter is strenghthened by getting to keep his job, the Secretary General of the Presidency, Cristian Larroulet, is weakened by getting to keep his. Most evaluations of the job he has done in the ministry, which is a kind of prime ministership, responsible for various aspects of public policy design and dealing with Congress, have been lukewarm at best. In fact, it is likely that Chadwick will handle much of the political dealings with Congress. Larroulet probably got to keep his job in exchange for the other concessions the president gave the UDI.

The bottom line is that a cabinet shuffle is always about two things; fixing those areas which are not doing too well, and responding to a public evaluation of how things are going. They allow the government to press the reset button. In this sense, the cabinet shuffle was was past due, and by making such deep and broad changes, the president has given the signal that he recognizes that major surgery was required. Good for President Piñera.

But if one considers what the underlying challenge for the government is -- a popular demand for more political representation and accountability -- this shuffle does quite the opposite. It removes the two youngest members of the cabinet, Kast and von Baer. It brings in two senators, allowing the UDI to select who will replace them in the Senate, thereby undermining the popular will of the voters who elected them. It brings in more hard line UDI politicians with direct links to the architect of the military regime's constitution, Jaime Guzman, weakening the Hinzpeterian argument for a new, more liberal, right.

In other words, one step forward, two steps back.
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Locating Humala

A lot of people are talking about a post-neoliberal period, while others (especially in Europe) seem to think we have entered a post-social-democratic age. In Latin America, the big discussion of the last decade -- Latin America's left turn -- has also been overtaken by events.

In Peru the election of Ollanta Humala presents further challenges, as his ideolgical past and his more centrist presidential campaign makes it difficult to place him. This is not particularly new for Peru, which has had several candidates campaign from the left and then move to the right, but many thought Humala would fall snugly into the Bolivarian camp. Francisco Javier Díaz and I have written a piece for the UK's Policy Network on some of the challenges Humala, and Peru, may face in this regard.
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Piñera's Penguins

Here's a little something that was published today on the America's Quarterly website. I have already commented on the Adimark poll, but as I say in the piece, maybe the most interesting part is the low marks Chileans give the government on the economy. It's similar to what was happening in Chile in 2008, right before the crisis hit. However, at that time Lehman and his Brothers helped bring inflation under control. Also, the Bachelet government's social policy helped mitigate some of the effects of the crisis (or at least, helped project the image of a government concerned about mitigating the effects of the crisis). It's not very clear what internal or external factors will help change things around this time.
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Summer Loving for Education

The creativeness of Chilean students demanding better quality education keeps getting better (maybe their education is pretty good after all):

Another day, another poll

The June Adimark poll was released today, and it conforms what CERC said a few days ago. The government is in freefall. President Piñera's disapproval ratings are at 60%, and his approval ratings have dropped 10% in two monts, reaching 31%. In the same two months, approval of the government's handling of education dropped from 60% to 26%. This, as well as Education Minister Lavin's approval (46%), is obviously due to the ongoing student demonstrations. The poll was taken before the government's announcemnts on the subject two days ago.

Amazingly, the Concetación is still unable to harness this discontent, as its disapproval ratings continue to rise as well, and are now at 68%.

In other words, a plague on both your houses. Except that, in times of such political discontent, the plague is really on everybody's houses.
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No Mojo, the numbers

A new CERC poll came out today, and it confirms in raw data what it means it means to have lost mojo. President Piñera's approval ratings, at 35%, have dropped by 12%.

Of course it is not hard to see why. So with thousands participating in street demonstrations in favour of better public education, the president responded tonight with a televised announcement: The plan includes a new education fund, improving access and accreditation of universities (he didn't say how), creating a new bureaucracy for universities (he didn't say what) which would, amongst other things, seek greater transparency in order to determine which universities are for-profit, something which is currently illegal in Chile.

This last point is particularly interesting because at least two ministers in the Piñera government have been partners in private universities. In fact, the Chilean version of the General Accounting Office announced today it would look into Education Minister Lavin's ties to on private university.

The other oddity is that the president announced a Great Accord for Education. But clearly his statement today was more of a proposal than an accord. With whom has he reached this accord?

Still, there is not much one could disagree with in the speech. There were also few details, and no indication of how he will proceed legislatively, where the whole thing will get bogged down.

And so it goes....
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The lost mojo

For the last twenty years Chile's calling card has been political governability and economic stability. That is why one of the things I have been arguing for a while is that sooner or later the social unrest in Chile would begin to be a cause for concern for foreign investors. While the government looks upon the demonstrations with seeming disdain, I always thought that the attitude would change once Chile's image abroad started to take a beating.

Well, here we go, folks.... A few weeks after the Economist published a note, it seems Time Magazine has taken notice. Apparently, the president has lost his mojo. I bet he didn't even know he had mojo, but he doesn't any more.
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Mass demonstrations and the government

Over the last weeks and months the tendency to hold mass demonstrations has become stronger. Hundreds of thousands have marched in favour of the environment, education, and diversity. This is unusual for Chile and is worthy of further examination. It undoubtedly goes beyond the issues themselves, and presents a real challenge to every political sector and the political system as a whole.

The government's reaction has also been interesting. For the most part, the approach has been to try to isolate the demonstrators from the broader public, presenting them as violent and ideological extremists. As I say in this column published today en El Dinamo, this language seems out of date, from another -- shall we say -- more military time. Worse still, it seems to imply that these problems don't exist. That there are external forces -- either foreign interests or foreign ideologies -- financing and pushing for causes which are not really in the interest of, as an American president once put it, the great, silent, majority. If this is so, Chile seems to be heading down a great, not-so-silent, road.
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