Given the political upheaval in Venezuela and Brazil, Chile remains a good-news story for South America. But times have gotten bit tougher in recent years and, as in other developing countries, Chile’s leaders are a victim of their country’s recent success.
During Michele Bachelet's first term in office over a decade ago, Chile’s GDP was growing at better than 5 percent amid booming emerging markets. But the twin blows of a devastating earthquake and declining commodity markets turned the country's fortunes around. Having been elected to a second non-consecutive term as President in 2013 on pledges of free higher education, steeper business taxes and tighter regulation, she found herself unable to keep those promises. Growth is now below 2%, inbound investment is down, and unemployment is rising.
Bachelet is due to leave office in November, and I spoke to her during a recent visit to Santiago about Chile's fitful progress and demanding future. Here's the full transcript:
TIME: A decade ago, Chileans had historically high expectations for their futures. But a series of crises (including the 2010 earthquake and the slowdown of the commodities super-cycle) have created serious economic challenges. What does Chile need to overcome these challenges?
Bachelet: Chile has good reason for its high expectations. For decades, we’ve been building policies and institutions to promote growth and increase living standards. We certainly face important challenges. We still have high levels of inequality and increasing demand to build a more inclusive society, one where opportunities are available to everyone. We also need to close the productivity gap that explains the almost 50% income difference with respect to developed countries.
Our priority is to implement productivity policies for inclusive growth. The education reform we’re implementing is the core of that strategy, because it levels the playing field within society, and because it will help all Chileans develop the tools and skills we need in a globalized, technologically sophisticated economy.
There is much more to do. We must diversify our economy, attract more investment, work to make small- and medium-sized businesses more competitive, simplify government administration, and find new ways to encourage innovation.
You have undertaken ambitious reforms in a challenging economic environment. What do you see as the biggest obstacles to positive change?
Starting in the early nineties, Chile implemented a first generation of reforms that led to decades of high growth and an unprecedented reduction in poverty rates. But as Chile gets closer to the income levels of developed countries, the challenge become more complicated, and we can’t grow along the same path. The drivers for growth will be different tomorrow than they were yesterday. At the same time, people who have been empowered by positive change are demanding quick solutions to current problems.
That’s our biggest question: How do we build an intelligent plan for growth over decades while responding to citizen’s immediate demands for less inequality and more opportunity. We must do both.
How is Chile different than its Latin America neighbors? What forces have made Chile different?
Democracy, the protection and promotion of human rights, and an open economy are the basic principles that underlie Chile´s development since the early 1990s. There has been a constant effort to improve and modernize our institutions, invest in social policies, open spaces for the participation of civil society, and promote an active foreign policy, including the negotiation of free trade agreements. These and other actions have created economic growth, the reduction of poverty, better public policies (as our membership in the OECD signals), and a strong presence within the region and in multilateral institutions. The tax, educational, labor, and constitutional reforms my government is implementing are designed to make sure we keep these gains while working toward inclusive sustainable development and the reduction of inequality.
How has President Trump changed the Chile-U.S. relationship, if at all?
The relationship between the two countries remains very strong. Chile is a close partner of the United States in Latin America. Our bilateral agenda covers trade, investment, energy, education, innovation, and security, among other areas of mutual interest. Chile is the only Latin American country that participates in the American Visa Waiver program, and we share a longstanding relationship in defense, through training and participation in joint exercises.
Today, the United States is Chile´s second trading partner after China, with a trade surplus that favors the U.S. Our Free Trade Agreement has been instrumental in opening the market for new products and services, as well as to attract investment. Since January 2015, all trade in goods between our countries is duty-free.
The United States is also the leading foreign investor in Chile, with close to US$ 30 billion since 1974 in mining, retail, utilities, communications, insurance and other sectors. It works in the other direction, as well. Between 1990 and 2015, Chilean companies have invested billions in the United States, mainly in services and mining.
Whenever a new government is elected, there is always a process of adjustment and mutual learning, but we’re confident that Chile – U.S. relations will continue to flourish on the basis of shared values such as democracy, open markets, and sustainable development.
On trade, can other countries move forward with the Transpacific Partnership (TPP) without the United States?
Chile is committed to economic integration in Latin America and Asia Pacific. We will continue to work to open markets for our goods and services, bilaterally, regionally or multilaterally, with willing countries. Chile a summit on integration last March, at which the Pacific Alliance countries announced their decision to launch negotiations as a bloc with Asia Pacific countries. High-level officials from the remaining 11 TPP signatories, including Chile, are in permanent contact, looking for ways to ensure that what was achieved in the TPP can be carried forward.
In many countries, public confidence in the media is very low. It strikes me that this is not true in Chile, where the media remains trusted and popular. Why is the relationship between the public and the media different in Chile than in other countries?
I think it’s because people in Chile still believe in institutions and in the social contract between the media and the public. This makes our democracy strong. When we have problems, we confront them and make necessary changes.
But we must do more to continue to ensure the media’s independence, to maintain distance between the business of media and the public service of providing accurate information. Access to information is a human right and a safeguard of our democracy. Chilean society is still waking up slowly after a long period of dictatorship.
We must also stay on top of social media. This is the democratization of information, and it gives us important data on how our society is changing. But government has a role to play in ensuring ethical use of these tools. Media shares in this responsibility.
What challenges does Chile face from the turmoil in Venezuela? Should Latin American governments become more involved in trying to resolve that crisis?
We’re following the situation in Venezuela closely. Chile supports dialogue between the government and the opposition as the only way to ensure that the Venezuelan people determine the future of their country in a peaceful manner. On April 30th, the governments of eight Latin American countries - Argentina, Brazil, Chile, Colombia, Costa Rica, Peru, Paraguay and Uruguay – made clear that it’s essential to have clear conditions for a negotiated solution in Venezuela. That means violence must end. The law must be followed. Political prisoners must be released. The constitutional powers of the National Assembly must be restored. And we need an election timetable.
This is not just a regional challenge; it’s a global one. We will continue to promote a peaceful resolution to the crisis in Venezuela, and we call on other governments to join us.
Should Chile tighten its migration policy? Why or why not?
Given global trends, it’s clear that migratory flows will continue to grow throughout the world. Chile is a country of migration. We have benefitted greatly from migration. Our country has undergone a great change in a little more than two decades, and part of that is linked to the steady increase of foreign-born people who now live and work in Chile. Our migrant population is estimated at around 500,000. These people are mainly women and young adults, with higher schooling than their Chilean counterparts, who come to Chile in search of work opportunities.
We must count on institutions that provide stability and justice. We are developing a new migration policy, one that will grant rights and obligations to immigrants, all in accordance with international law and the protection of human rights.