The Government’s Ideological Defeat

The government is badly wounded. It had to concede and even stomach important defeats in parliament and the constitutional plebiscite. But how will the opposition deal with that?

The curious history played out over the last two weeks is summarized, more or less, like this:

Representative Pamela Jiles of the Humanist Party, which has just three parliamentarians, presented a project to allow the withdrawal of another 10 percent from privately managed pension funds, although a first 10 percent withdrawal was already approved two months ago. The government sounds the alarm and claims this project could destroy the pension system, so if it advances, the government will stop the ongoing pension reform. Under no circumstances will it support a second withdrawal.

But unexpectedly the project is approved in the Lower House with 130 votes – 42 coming from the ruling National Renewal party – achieving the required high quorum. The government, meanwhile, on the sidelines, looking on. Jiles jumps in presidential polls and remains among the top four contenders.

The government – looking on. Just when the bill is about to be voted on in the Senate – with guaranteed votes from the right – government palace La Moneda warns that it will appeal to the Constitutional Court and submits a project all too similar to the one discussed in Congress, but with more restrictions. In the end, the government’s initiative prevails, but remains practically the same as the original, except that those who earn over US$900 per month must pay taxes on their withdrawal.

Read more:

Chilean House Approves Second Pension Withdrawal

Close Call

Yet, the government declares victory and applauds itself. Finance Minister Ignacio Briones highlights that with the project the executive prevented the development of a “parallel Constitution,” since Chile is governed under a presidential regime. What Briones forgot to mention is that the project was approved by government supporters.

The truth is that La Moneda managed to align its parliamentarians, undoubtedly the only positive development after this embarrassing episode. However, it caved – for the second time – on an issue considered fundamental for government coalition Chile Vamos. The pension system was created in 1980 during the dictatorship and was always considered a pillar of the economic system the Chicago Boys built.

The government resisted from the beginning the withdrawal of pension funds, arguing that this put the system at risk. It acidly criticized parliamentarians who supported both initiatives, while three Independent Democratic Union (UDI) parliamentarians – crucial for the coalition – even resigned, because their support for Jiles’ project put them before UDI’s disciplinary court.

A Victory…or Something

Hence, the government’s triumph remains a simple communication maneuver. Due to the weakness of the Piñera administration, the Chilean right has conceded much of its ideological project. In just three months, it suffered the fall of the pension system – created by the president’s brother no less – and a resounding defeat in the plebiscite that ended the Pinochet Constitution.

But if the government lost ideologically, the opposition is leaving the notion of its inability to take advantage of this weakness. Without a doubt, the opposition’s best outcome would have been for the government to take the initiative to the Constitutional Court. This would have created a bigger problem for Piñera, who would have been seen lobbying publicly and ferociously against an initiative that benefits millions.

The opposition is still divided, without clear leadership. What’s worse, it has failed to become an alternative to solve the political crisis that engulfs the ruling party.

Also read:

Legislative Populism and Economic Projections Raise Concerns

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