From a disputed first round election to the biggest triumph of a presidential candidate in 24 years…What’s next for Chile?


Former President and center-right candidate Sebastián Piñera’s (RN) victory in Chile’s run-off presidential election this Sunday was met with surprise, not so much at the result, but at the wide margin of victory that separated him from his opponent, Alejandro Guillier (PRSD). Polls overwhelmingly failed to predict the outcome of the vote – Piñera was expected to win by a much wider margin in the first round, but achieved only 36.6% of the vote, forcing a run-off vote this past weekend. That race was expected to be much closer than it was – instead, Piñera’s final margin of victory was a full 10 points above Guillier. In light of these events, it is worth examining what analysts missed, and what to expect from Piñera’s second non-consecutive term, having previously governed from 2010-2014.

Criticism of stagnation under Bachelet propels Piñera to victory

Public and political opinion wrongly predicted that the center-left would be able to generate more participation than the center-right. Piñera obtained almost 600,000 more votes than his opponent – almost as wide a margin as Patricio Aylwin garnered as the first president elected following the country’s return to democracy. Predictions were also misguided in thinking that increased voter turnout in the second round would favor Guillier. To the surprise of many, the run-off saw 300,000 more voters than the first round, with many of those votes going to Piñera. Whereas center-left Guillier failed to rally the progressive left, Piñera was able to bring in support from the populist right, thanks to the endorsement of first-round skeptics such as José Antonio Kast, Felipe Kast, and Manuel José Ossandón. What’s more, Piñera also strengthened his position in key regions traditionally held by the left. Atacama, for example, had not elected a center-right candidate since 1999; Piñera won 55.55% of that vote.

This points to the importance Chileans are placing on economic growth, rather than the on the need for social reforms emphasized by exiting President Michelle Bachelet, which Guillier supported and promised to build upon. This vote was as much a referendum against the stagnation of the past four years as it was a vote of confidence for Piñera. While the international community may have lauded Bachelet’s socially progressive policies, they did little to generate domestic growth and employment, especially at a time of sinking international copper prices, the country’s primary export. Piñera ran a strategic campaign focused on economic growth, advocating for policies that would attract and increase foreign investment, such as easing industry regulations and cutting corporate tax rates. The markets are already responding favorably to Piñera’s victory, with the stock market recovering the losses from the past month’s uncertainty, an increase in the valuation of assets, and projections of Chile’s GDP increasing from 1.5% to 2.9%.

Managing expectations and diverging politics

Piñera’s Presidency will not be smooth sailing, however. Copper prices remain low, and he will have to mitigate the high expectations from his first administration, which overlapped with a high demand for Chile’s natural resources. Furthermore, despite his considerable victory, the left still holds a strong appeal in the country, and significant power within the government. Piñera lacks a majority in both the Chamber of Deputies and the Senate, meaning his administration will be forced to cooperate and seek support from the opposition to pass legislation, and it will be unlikely that any sweeping reforms are put through.

The President-elect has already given clear signs that he will work to cooperate with the moderate-left, having run on a narrative of “unity and change.” He has already reached out to exiting President Bachelet for help and advice, and has said that he would incorporate some points of Guillier’s platform into his own policies. This will be increasingly important as the general population eschews centrist, establishment politics – Right-wing populists such as Kast, and the progressive Broad Front coalition both posted stronger than expected showings in the November elections.  What will be key for Piñera’s success will be his ability to forge alliances with the left without alienating the right-wing movement that helped elect him. We expect that Piñera will not move to eliminate the reforms already put through by Bachelet’s government, but instead strike a new tone favorable towards growth and foreign investment going forward.

 

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Ian Herbison

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  • Email: ian.herbison@speyside-group.com