Longread: How Think Tanks Shape Chilean Politics

Over the last decades, different policy institutes exerted important influence on Chile’s legislative agenda. The relationship between self-proclaimed policy experts and state authorities has found an important nexus in business interests. Both right and left institutes have received financing from businessmen like Adrónico Luksic and Nicolás Ibáñez, influencing disproportionately the public agenda and damaging the representativeness and legitimacy of Chilean democracy.

Since the founding of the first think tank, the Centro para Estudios Publicos (Center for Public Studies, CEP) in 1980, the rise of policy institutes in Chile has led to an increasing number of  economic experts that oscillate between important positions in the public and private sectors.

Nowadays, most think tanks are constituted as non-profit organizations. Nevertheless, some of them are funded by governments, advocacy groups, or corporations, and obtain revenue from consulting or research work related to different projects. Nothing wrong so far, right?

Well, yes, but the triangular relationship between the government (executive and congress) with the private world and with other policy-influencing institutions with a supposed public purpose causes an uproar in public opinion from time to time.

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The academy is not their yardstick

It’s important to highlight that research from think tank “experts” is not necessarily objective. The value and importance of think tank studies do not reside in academic standards; that is not their yardstick when creating research.

Rather, this research is aimed at decision-makers and functionaries whose objective is the practical applicability of public and social policies. Therefore, their expertise can be understood as an elaborate form of social influence, validated through reliance on an institutional framework.

The question then becomes why do some issues become part of a government’s priorities while others fall by the wayside?  This cuts to the core of the issue about the cycle of public policies; how a public issue emerges onto the agenda of an administration or the parliament.

This is not primarily a left or right issue, because all sides of the political spectrum have used think tanks to frame their public policies.

Think tanks aren’t obscure organizations per se. Most have websites clearly stating their agendas and objectives, political ideology, and key figures – although sometimes these are hidden behind terms like ‘investment fund’ or ‘real estate company’.

Their links with special interests are thus more shady. It also becomes clear that Chile’s oligarchs, although they seemingly finance politically opposed think tanks, unite in their quest to influence policy to maintain their fortunes and power.

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The technocratic management focus of La Concertación

Chile had been governed for 20 years by a center-left coalition called La Concertación since the return of democracy. During that time, a myriad of teams, strategic communication agencies, polling firms, lobby organizations and think tanks were founded.

  • Prominently figures the Centro de Estudios del Desarrollo (Center for Development Studies, CED), founded in 1980 and run by Christian Democrat (DC) representatives, anchored in Chile’s political center.
  • The Corporación de Estudios para Latinoamérica (Corporation for Latin America Studies, CIEPLAN) is led by former finance minister Alejandro Foxley and Patricio Meller, former CEO of state miner Codelco.
  • CIEPLAN advised different administrations on social policies with a technocratic management focus. It successfully built a favorable public image, not least by simplifying technical parlance and distributing it through a series of publications.
  • Corporación Expansiva (Corporation Expansiva), another key center-left organization, was founded by Andrés Velasco who was finance minister from 2006-2010. His organization fused social-democratic and liberal tendencies and had much influence in Michelle Bachelet’s first administration.

In Chile Today in History: On January 15, 2006, Michelle Bachelet defeats Sebastián Piñera in the second round of the presidential elections and becomes Chile's first female president.

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The Luksic Group revolving door

Running on a center-left platform that even promoted the Communist Party as member of her Nueva Mayoria (New Majority) coalition, Bachelet’s 2013 campaign received heavy funding from the Luksic Group.

As one of Chile’s largest business conglomerates, owned by the country’s richest person, Andrónico Luksic, the Luksic Group moves several key sectors of the national economy, among them mining (Antofagasta Minerals), beverages (CCU), and finance (Quiñenco).

This socialist-business alliance may seem odd to outsiders, but the Socialist Party has always honored the unwritten post-dictatorship deal: business won’t overthrow democracy again if politicians won’t attempt to overcome Pinochet’s capitalism.

With the resulting neoliberalization of the left, also came its acceptance of the system’s power relations. But the massive social mobilizations in 2011 by a generation unbowed by the trauma inflicted by dictatorship, caused unease in the upper echelons of Chilean society.

Hence, Luksic and former OECD chief economist Klaus Schmidt-Hebbel founded a “group of reflection” about the economy and human development. Its brainchild, Res Pública Chile (GRPC), produced 95 proposals for a better Chile, which figured enormously in Nueva Mayoría government programs. Luksic’s financial and ideational support was crucial to get Bachelet to the presidency for a second time, from 2014-2018.

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But even before the efforts focused on civil society, the Luksic Group has followed a strategy of recruiting former high-level Concertación and Nueva Mayoría cabinet members to boards of different Luksic-controlled companies.

This way, the conglomerate has installed a “revolving door” through which center-left functionaries move between the cabinet and Luksic directorships. Obviously, this strategy maximizes political access and was most pronounced during the Bachelet tenures 2006-2010 and 2014-2018.

For example, René Cortazar, transport minister in her first administration, and Alberto Arenas, former finance minister and key architect of the 2014 tax reform, moved from the Nueva Mayoría campaign and cabinet to the board of Lukisc-owned Canal 13 television channel (where Luksic appeared personally several times to defend his business).

Former education minister and fundamental player in the 2015 education reform, Nicolás Eyzaguirre, also moved onto the Canal 13 board.

In 2018, more than 270 workers of the channel were shed overnight. The decision was announced by Maximiliano Luksic, deputy executive director of Canal 13 and Andrónico’s third son. The firings were justified as necessary to solve the station’s financial crisis, for which it also signed an alliance with a Spanish consultancy to lower costs via outsourcing, i.e., precarization of work.

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A main reference for the right

In the case of the Chilean right, the first think tanks were Libertad y Desarrollo (Liberty and Development, LyD) and the Jaime Guzmán Foundation. Both appeared in the early 1990s with a clear emphasis on public policy issues, claiming to provide a new space for political discussions and dialogue between the political parties of the right, especially with pro-Pinochet Democratic Independent Union (UDI). (Pinochet confidant Jaime Guzmán founded UDI, wrote Chile’s 1980 constitution, and was murdered in 1991.)

Since the return of democracy, LyD has been a main reference for the right in the provision of technical expertise and supply of ideas, and one of their founders, Cristián Larroulet, was minister of the presidency’s general secretary in the first Piñera government (2010-2014). In that position, he pushed the president’s legislative agenda in congress. And he wasn’t the only one: over 25 LyD members worked in that administration.

LyD is also a partner of the Atlas Network, a US nonprofit organization based on Randian ideas which promotes free-market economic policies globally and covers dozens of think tanks across the region.

Another Atlas Network member is Fundación Para el Progreso (Foundation for Progress, FPP), a libertarian policy institute that in recent years has been gaining momentum, in part, thanks to the economic support of multi-millionaires.

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Right-wing financing

Many right-wing think tanks have benefited from Nicolas Ibáñez, who is known for his ultra-liberal economic positions and an unapologetic defender of the dictatorship.

Former owner of the ubiquitous supermarket chain Líder (currently owned by Walmart), in 2013 and 2014 Ibáñez donated over US$ 800,000 to FPP. In 2012 he founded the think tank and sits on its board with other powerful businessmen such as Dag von Appen of maritime services provider Ultramar.

At the beginning of Bachelet’s second government, his son Sven threatened they would “seek another Pinochet” if she doesn’t do things right. Francisco Pérez Mackenna is another FPP board member, notable because he’s the general manager of investment company Quiñenco, founded and owned by – surprise – Andrónico Luksic.

Also on the board is Gerardo Varela, education minister from March to June 2018, and famous for a column in conservative daily El Mercurio where he stated that he didn’t believe in public education.

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FPP has followed the successful model of LyD of influencing the design of public policies by getting members or collaborators into decision-making positions. When Piñera presented his cabinet in early 2018, FPP’s weight in the government was considered equal to a political party.

At the beginning, three FPP members were part of the Executive: Gerardo Varela (Education), Mauricio Rojas (Culture) and Roberto Ampuero (Foreign Affairs). Today, however, only Ampuero remains.

Rojas, an Ibañez confidant, has exemplified the importance of importing the ideas of organizations such as FPP saying “The government has recognized that classic liberal ideology must serve as a guide, because that is the philosophy that has [helped to overcome] poverty, inequality and lack of inclusion”. This language is typical for libertarian or conservative think tanks.

But Ibáñez’s influence reaches beyond FPP and the Piñera administration. The businessman donated in the 2017 presidential election over US$ 107,000 to candidates of Chile Vamos (Let’s Go Chile), the coalition currently in power, becoming one of the main financiers of the political right.

In addition, Ibanez’s Drake business group has an investment fund especially designed to maintain several of his foundations by permanently providing funding with a special mandate that protects the funds from being touched by his family.

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Smoking gun

Although a general influence of think tanks on legislation is evident, finding concrete cases related to lobbying turns out tricky. One clear case, a smoking gun, was the transfer of money from British American Tobacco Chile (ex-Chile Tobacco) to LyD, the main legislative advisory center of UDI party.

UDI parliamentarians not only delayed the vote on the modifications of the “Tobacco Law”, but also systematically opposed most of the restrictions that the bill finally applied to tobacco companies.

Among them, the prohibition of smoking in closed spaces, limits to indirect advertising (promotions and product placement) and the obligation of the tobacco companies to inform about their donations.

President Piñera, member of UDI’s rival in arms, National Renewal (RN) party, signed the bill into law after considerable debate and stonewalling in 2013.

Crucially, the president of the Chilean branch of British American Tobacco is Carlos Cáceres, finance and interior minister under Augusto Pinochet. Cáceres has also served since 1991 as president of LyD. The former Pinochet minister is also recognized as one of UDI’s main operators in the strategic task of collecting funds in the business world.

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Legitimacy and representation in peril

The steady influence of think tanks in the Chilean political system should open a debate on how and to what extent certain expertise represents valuable input for the formation of quality policies. Around this issue two related problems could arise.

The first is related to the participation of citizens in processes of making laws and public policies. Deliberative processes in a democracy involve the opening of decision-making areas to public debate, directly and through elected representatives.

At present, the management of expertise by think tanks can affect the premises under which political participation is open to anyone, generating a bias favoring technocratic and corporate views in the definition of public affairs.

The second focus is on legitimacy. Expert knowledge arises as key factor that clouds and thus justifies ideological policy as technical decision. Such “expertise” undermines codes of scientific knowledge, presenting itself as true and indubitable argument.

Apart from the problem for democracy, this approach will also weaken Chile’s carefully crafted image as scientific start-up nation, with debilitating effects for its universities and scientists.

The consequences of these phenomena reveal fundamental questions about the norms and values ​​that guide public affairs in Chile’s current democracy. Political forces that run the government and congress take too many ideas and programs not from civil society, but from corporate-financed entities that serve their founders and funders first, and, only if possible, the rest of society second.

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