Thursday, January 19, 2006

Jan 19/06 - On our expectations for Chile's new President: is good governance an exportable commodity?

PMBComment: as I was about to post a commentary on the true meaning of Chile’s election, and the more than obvious contrast it poses to the much heralded – and wretched – resurgence of the populist left in Latin America, I came across today’s editorial from Investor’s Business Daily. IAB is a financial markets publication that overtime has proven to have a real feel for what is real and what is make-belief in Latin politics. This quality, notably absent in some mainstream editorial rooms, is key when comparing Chile – which as real as real comes, to Chávez’s brew – which is putrid smoke, and conked out mirrors.

One would only hope that Ms. Bachelet, praised by many for her sharp intellect and stubborn resilience, will understand that as the new leader of “the brightest star in Latin America”, her new responsibility extends to promoting the values and example of good policies and good governance to the region. Our expectation is that a proven record, if well packaged and sold, will be a better export commodity that uncouth and already-failed populism.

For sure this recommendation will demand a certain level of activism not commonly associated with typically demure Chileans, but Ms. Bachelet, like Germany’s new Chancellor Ms. Merkel, with their common East German experience, know all too well the impact of failed dogmas and the all-too-real consequences of disheveled neighborhoods. PMB

Investor’s Business Daily

Issues & Insights

Chile's Bright Election

Posted 1/18/2006

Latin America: Contrary to worries about a regional swing leftward, the election in Chile of socialist Michelle Bachelet as president is far better news for the U.S. than for the region's anti-democratic left.

We've seen Venezuela's Hugo Chavez and Bolivia's Evo Morales fall all over themselves to immediately claim Chile as a new member of their anti-U.S. orbit. It's just not true.

On Wednesday, for example, Chile announced interest in studying free trade with two more nations — Malaysia and Thailand — extending its broad international presence, something that's anathema to the two Castroites.

What's more, the Bush administration was among the first to congratulate Chile's people and new president, an old friend and trading partner.

What they and those on the right who fear a "dangerous swing to the left" miss is that Chile's voters weren't electing 1960s-style radicals. They were voting to stay a course that's made their country the brightest star in Latin America.

Chile leads the region in economic growth and, equally important, shows how well a two-coalition democracy works.

Bachelet, encouragingly, vowed to keep Chile's economy "vibrant" and, unlike Chavez, declared a sincere intent to work with her political opponents.

Sunday's election was not a reaction against capitalism and what the far left vaguely calls "neoliberalism." It was a fourth term for the center-left coalition that has served the country responsibly since 1990.

If winners like this can be called left wing, consider the fact that Chilean leaders are known for their free-trade pacts with the U.S., China and Europe, their fiscal prudence and their caution in extending social welfare benefits.

Under their leadership, Chile has the highest budget surplus in Latin America, amounting to 4.5% of its $103 billion GDP. It's kept government intrusion minimal, the private sector alive and the economy growing at a respectable 6.3% rate in 2005.

And unlike its neighbors, it has a 25% investment-to-GDP ratio, showing voters' belief in the future.

Unemployment is still a socialistic 8%, but it tops other countries in the region, and with severe poverty reduced to 19%, one of every 16 Chileans have moved to the middle class since 1995.

The center-left government has pragmatically retained Chile's popular private pension plan launched in 1981 under its historic enemy, Gen. Augusto Pinochet, and now vows to improve it.

The Bachelet coalition's program is so mainstream that its conservative rival, led by Sebastian Pinera, had trouble distinguishing its own program from the Bachelet team's, signaling a broad consensus about free markets.

What's possibly most significant to many in Latin America is not Chile's leftward drift, but its clean election, executed swiftly and fairly. That won't be lost on the region's voters, who are stuck in deeply flawed leftist regimes with ruined institutions and power concentrated at the edge of dictatorships, as in Venezuela.

For those voters, the sight of a left-leaning government that respects its opposition, opens itself to the world, refuses to drive its private sector to ruin and doesn't leave in a hail of bullets is a real alternative. That spells trouble for anti-democrats like Chavez. Castro must know this; his congratulations were absent.

Chile's a very different left democracy than the one Chavez and Morales think they are hailing. And one that's like the one represented in the U.S.