Gabriel Boric: the political and economic challenges he will face to fulfill his promise to transform Chile

It was a historic triumph. Gabriel Boric beat his rival, José Antonio Kast, by a wide advantage of almost 12 points in the second round of the elections held this Sunday in Chile.

The leftist, who when he arrives in La Moneda on March 11 will become the youngest president the country has ever had, at the age of 36, won the victory with 55.86% of the vote, compared to 44 , 14% obtained by Kast, a radical right-wing lawyer.

And thousands of Chileans, hopeful with the profound changes he promises, celebrated his triumph.

His government plan includes measures such as increasing taxes on the wealthiest and large companies, ending the current pension system and transforming the health system, with the idea of ​​creating a welfare state.

It is an ambitious plan that reflects many of the demands of the social outbreak which began in October 2019 demanding greater equality in a country where the free market has dominated for decades.

“We must move responsibly with structural changes without leaving anyone behind; grow economically; convert what for many are consumer goods into social rights regardless of wallet size; and guarantee a calm and safe life, “said the president-elect in his first speech after the victory.

But the transformation that Boric – emerged from the bowels of the student protests of 2011 and with a parliamentary career of eight years in the Chamber of Deputies – will try to carry out will have important challenges.

We tell you some of the most important.

1-Govern without a majority in Congress

One of the essential points of the new mandate is that the president-elect will govern without a majority in Congress.

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Hundreds of thousands of people took to the streets to celebrate Boric’s victory.

Boric awaits a Senate where the political forces are tied and a House of Deputies very divided between different factions and with narrow differences.

For example, his own party, Convergencia Social (which has only been in existence for three years), will have 9 out of 155 deputies.

The inevitable challenge at this juncture, experts agree, is that he will have to sit down to negotiate under strong pressure, not only with the broad coalition that brought him to power (ranging from center-left parties to the Communist Party), but also with some of his adversaries.

He knows it, and in his speech after the victory, he already anticipated that progress will require major agreements.

“Progress will require broad agreements, we do not want to get out of hand or risk what each family has fought with their efforts,” he said before hundreds of thousands of protesters who applauded his victory.

His triumph reflects that “the country seeks changes, specifically in the social security agenda, but these changes must be made with the support of a majority,” says Marcela Ríos, a researcher at the United Nations Development Program (UNDP).

Reach agreements with other political sectors It will be key to advancing its transformative agenda, which will require the approval of important legislative reforms.

Gabriel Boric.

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His first speech.

And it will require great political skill, because for some initiatives it will need the votes of political sectors with visions and aspirations very different from yours.

2-Maintain the support of the coalition that brought you to power

In addition to negotiations in Congress, the next president will have the complex task of maintaining support within his own political coalition.

To get to La Moneda, Boric had to add to the ballot the votes of political forces from the center left that for years were the target of his criticism (represented by figures such as former presidents Michelle Bachelet and Ricardo Lagos).

It is an electoral alliance, the Communist Party (PC) and representatives of the Christian Democracy (DC) coexist under the same umbrella, united more than by a common vision, by the purpose of preventing Kast from reaching La Moneda.

José Antonio Kast.

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José Antonio Kast was defeated by more than 11 points in Sunday’s ballot.

It is a bloc similar to the one that supported Michelle Bachelet in her second government (2014-2018).

However, Boric is not assured of the full support of all these parties, as the socialist did.

“One of the great risks is that by being in command of a coalition as heterogeneous as it is fragmented, Boric will become a general without troops,” says sociologist Andrés Scherman, a researcher at the Adolfo Ibáñez University (UAI).

In fact, the DC warned a few weeks ago that it was giving Boric the vote, but that after the elections it would become a party opposed to his government.

And the same logic operates on the other side of the scale.

“One of the challenges is how to maintain the support of the groups that are more on the left. He is going to have to define himself, he is going to have to choose one path or another ”, argues Diana Kruger, dean of the UAI School of Government.

If the reforms he proposes are seen as too radical, he could lose the backing of his more conservative allies.

But if the most radical forces – such as the CP – consider that Boric is making too many concessions, they could withdraw his support.

For this reason, many say that the new president should have the talent of a tightrope walker on the tightrope.

3-The relationship with the business community

A third fundamental relationship will be the one that Boric establishes with the business community.

“There is no growth without social cohesion, there is no possible growth in a socially fractured society,” he told them at the beginning of November during an intervention at the National Meeting of Entrepreneurs, ENADE, a sector that has expressed some concern about his proposals to increase taxes and transform the pension system.

“Boric will have the challenge of signaling to the private sector, companies, and financial markets that the measures it proposes are going to be gradual,” says Kruger.

Woman with Boric flag.

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Those who handle large capitals are waiting for definitions.

Their fears have been expressed, for example, in the surprising increase in the distribution of profits between the shareholders of large companies and capital outflow abroad, accelerated since the social outbreak.

According to the Central Bank, in the last two years there was a record of capital outflows from companies and households in the country that reached US $ 30,000 million.

Cristóbal Rovira, director of the Research Institute in Social Sciences at the Diego Portales University, says that the first signs will be fundamental.

For example, it will be key who assumes the position of Minister of Finance.

“If Boric names a person respected by the business sector, that would open a bridge for dialogue.”

If, on the other hand, he explains, “the signs scare the business community, a kind of war could break out that until now was buried.”

4-The economic “braking”

Boric will need a lot of money to carry out its ambitious reform program.

And the forecasts agree that, as in much of the world, an “economic slowdown” is looming in Chile.

Growth could be around 2% next year, according to the Central Bank, but it could even drop to zero in 2023.

With few funds in the fiscal coffers After a gigantic injection of public resources to face the pandemic, the path is complex.

And despite the fact that the Central Bank has steadily raised interest rates to try to control a soaring inflation of 6.7%, its highest level since 2008, it is likely that in 2022 the country will continue to face inflationary pressures.

At the level of the family budget, the fiscal subsidies that were delivered en masse to people affected by the pandemic are coming to an end, as well as a large part of the circulating money thanks to the controversial early withdrawals of pension funds.

With low growth, high inflation and a tight fiscal budget, the next government will have little room for maneuver to meet social demands.

Anti-government protest in Santiago de Chile last October.

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Anti-government protest in Santiago de Chile last October.

“Boric has the challenge of accepting a macroeconomic adjustment and enchanting the private sector,” argues Rodrigo Valdés, a professor at the School of Government of the Catholic University of Chile (UC).

“You need a credible fiscal anchor, put borders and agree on emblematic reforms such as taxes and pensions,” adds the former Minister of Finance of the second government of Michelle Bachelet.

The challenge is daunting because many of your voters have high expectations and will ask you to keep your campaign promises.

“Boric must synchronize a program that is radical in its ambition but moderate and gradual in its implementation rates, with one eye on economic growth and the other on the street,” says Juan Pablo Luna, professor at the UC Institute of Political Science. .

5-Maintain order

In recent years, and despite the fact that the security figures in Chile continue to be much more positive than in other Latin American countries, the country has seen an increase in public concern about insecurity.

Not only as a result of drug trafficking and common crime.

There are also other issues that keep a part of the electorate awake, especially those who live outside the capital, according to Daniel Mansuy, director of the Center for Social Studies and Research at the University of Los Andes.

It’s about the violence in Araucanía (where there is a long-standing conflict between the State and the Mapuche people) and immigration in the north of the country, he points out.

Members of the Mapuche community.

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Members of the Mapuche community.

“Those areas did not vote for Boric in the first round (neither did Araucanía in the second, but in the north it obtained good results), and in both there are high degrees of conflict. Assuming that these problems are also theirs, and that they are not solved at the point of voluntarism will be one of their first challenges, “says Mansuy.

There is also the issue of what will happen on the street.

Since the social outbreak, radical groups have continued to demonstrate, often with violence, and analysts indicate that it remains to be seen how these sectors – and others that demand rapid and profound changes – will react if the president-elect opts for “gradualism.”

And how Boric from La Moneda will face the protests of which until recently he himself was a part.

2022 will be a year of great definitions in Chile.

Boric will assume as the first president who will not represent the traditional parties that have alternated control of the country in the last 30 years.

And in the second semester, the text of a new Constitution that is currently drafting a Constituent Convention formed after the social outbreak will be submitted to a plebiscite.

If passed, it could change the way power is governed and distributed.

It is a process that Boric supports and that could transform his presidency.

“We will defend the constituent process, which is a source of world pride. It is the first time that we have written a Constitution in a democratic way. Let us take care of this process so that it is a Magna Carta the result of the agreement and not of the imposition ”, when he greeted the millions of Chileans who voted for his proposal for change.

The millions who didn’t will also have their eyes on him.

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