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July 29, 2020

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CHILE: Another crisis, another reshuffle

BY Nicholas Watson

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President Sebastian Pinera reshuffled his cabinet yesterday, 28 July. The widely expected reshuffle follows a heavy defeat for the government in recent votes to allow people to withdraw up to 10% of their savings from the private pension (AFP) system to support themselves through the economic crisis triggered by the Covid-19 pandemic. Below we examine the main takeaways and implications.

The thrust of yesterday’s reshuffle was to reimpose order within the governing Chile Vamos (CV) coalition, which has seen rising factionalism and infighting. The changes should keep the main parties in the coalition happy, while also balancing out the factions that exist within them. The Interior Ministry goes to the Independent Democratic Union (UDI) but National Renovation (RN) gets the Foreign and Defense Ministries. The smaller Evopoli party loses out on the plum Interior portfolio with the departure of Gonzalo Blumel but retains the Finance Ministry under Ignacio Briones as compensation.

The Interior Ministry remains a position of critical importance. New minister Victor Perez has three main tasks ahead: 1) help heal the rifts that have opened up within the CV in recent months; 2) organize the 25 October constitutional referendum despite logistical uncertainties arising from the public health situation; and 3) manage any uptick in public order incidents if/when protests re-emerge as Covid-19 lockdowns are eased (assuming easing can continue). This is a daunting set of challenges, and while the veteran Perez may be popular within the UDI, his reputation as a die-hard right-winger and his opposition to a new constitution could make his job more difficult.

Opposition figures have already described Pinera’s new team as the “rejection” cabinet because most of its members have said they will vote against a new constitution in October. Perez has shrugged the charge off, saying that his priority is to ensure the referendum process is as smooth as possible regardless of his own views. However, there is no denying that the new cabinet is not exactly in sync with public opinion. The latest Cadem poll carried out last week puts support for a new constitution at 71%, versus 20% for the “no” vote (down from 26% in late April).

The other criticism – including from within the CV – is that no reshuffle can restore governability without a change in Pinera’s leadership style, which tends towards micromanagement. Pinera arguably remains the government’s weakest link, as reflected in his approval rating, which has dropped 15 points in the last four weeks to 12%, roughly at the level he was at during the October-January outbreak of social unrest. Pinera’s influential and controversial right-hand man, Cristian Larroulet, also remains in post. Without a different approach and given the challenges ahead, Pinera’s aspiration for this to be a cabinet to last the rest of his presidency could be difficult to fulfil.

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