By Gabriel Gaspar Tapia

Why are Chileans protesting? Isn’t Chile a promising emerging market?

University and middle school students have been demonstrating for two months, demanding quality public education and protesting about the predominance of profits in the Chilean education system, which has been privatised to the hilt.

The student protest has thrown the government of Sebastián Piñera on the ropes. The latest opinion poll put his approval rating at just 26 per cent compared with 60 per cent rejection. He is the most unpopular ruler Chile has ever had (surpassing even General Pinochet, the dictator who ruled Chile from 1973-90).

But this is not the only social protest the government has faced. Early in the year, a broad-based citizens’ movement for a “Dam-free Patatonia” forced a Spanish firm to put its plans to build a hydroelectric dam in the far-flung province of Aysén on hold.

What is behind this Chilean unrest? In my opinion, there are two main reasons for dissent: acute social and economic inequality, together with the need for political reforms that would give those in power more representation.

Chile has enjoyed spectacular growth in the last 20 years. Per capital income has risen from little more than $2,000 to $14,000 now. The minimum wage has gone up from $60 a month under Pinochet to nearly $300 currently. Chile exports more than 4,000 products and has a wide network of free-trade agreements which have turned it into the most globalised economy in Latin America. Chile, today, is a like a big duty-free shop. Chilean companies have invested more than $50bn abroad, especially in South America.

So Chileans, in short, are living better than 20 years ago. If we measure this in material terms, there are nearly 25m cellphones in a country of 17m people. Almost all houses have a battery of electrical appliances. The internet – and thus Facebook and Twitter – abound. The number of cars has multiplied and the road networks built in the last few years are struggling to cope.

So why are Chileans complaining?

Because although life is better, they’re faring worse. Income distribution has not improved and even if the economy grows, the same does not happen with most people’s incomes. A private credit boom has been the solution, but that ends up putting families massively in debt. Most own their own homes, have a nice plasma TV and some kind of car, but they’re paying for all of these in monthly installments. The result: in Chile, the notion of free time has virtually disappeared and Chileans live thinking about how to pay off the debts flowing from the millions of credit cards in circulation.

On the opposite side of the street, the top tenth of the population controls the bulk of incomes and lives in the First World.

This situation is especially reflected in education. The script says that the only way to combat inequality is through education and for that, you have to go to a good university. But to be able to pay for it, you have to have money. This is a vicious circle that most families try to resolve by getting into debt – a situation that creates thousands of students who graduate with enormous amounts of debts that will weigh on them for years before they have even got jobs. That is why we have thousands of protesting students. The issue in Chile is not getting an education, but getting a good one. Public schools have scant budgets, underpaid teachers and bad buildings.

The other issue is more complex. The ongoing protests reveal a crisis in the system of political representation. The system is currently based on a strong presidential system and a bi-party system (in reality, two large coalitions) in Congress, which provides stability but denies representation. And since parliamentary reelection is possible ad infinitum, in the 20 years since the end of Pinochet’s rule, a virtual parliamentary oligarchy has been constructed. These are the same legislators who should be voting for reform of a system but obviously won’t do so because it is not in their interests. The result is generalised criticism of “the politicians” by society. That includes the opposition, especially the Concertación coalition (which governed for 20 years until Piñera took office last year), which now has 17 per cent of support in opinion polls but controls more than 45 per cent of the seats in Congress. Students in the street shout: “People united advance without parties” (catchier in the Spanish ‘el pueblo unido avanza sin partidos’).

What is the future scenario? Ruling with 26 per cent support is not easy. But being in opposition with 17 per cent isn’t either. Is governability at risk in Chile? I tend to think not, because the country’s institutions are strong and the majority of protestors are not against the system, but are instead asking to be included in it. They are not criticising an export-orientated and dynamic economy, but demanding better income distribution. That has to do with the tax rate – and Chile has the lowest level among OECD countries.

What is evident is the lack of leadership. Since both the coalitions, which emerged in the dawn of democracy, are being questioned, the question is: who can capitalise on the discontent? Presidential elections are due at the end of 2013 – still a long way off. The government is a premature lame duck. With minorities in the presidential system and a Congress that lacks legitimacy, there is room for charismatic alternatives. Polls say the best-liked figure is the “Mother of All Chileans”, former president Michelle Bachelet, who is now running UN Women in New York.

Gabriel Gaspar Tapia is a Chilean political scientist, a former ambassador to Colombia and Cuba and a former deputy defence minister

Get alerts on Emerging markets when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article