Chile cannot afford a turn towards radicalism

Former student activist Gabriel Boric won Chile’s most controversial presidential race since his return to democracy. He is the youngest president-elect to date and the most liberal since Salvador Allende in 1970. The 35-year-old progressive must now undoubtedly shed his radical initial rhetoric, even at the cost of displeasing his passionate allies. Without pragmatism and a broad coalition, he has little hope of governing, much less of tackling the deep social and economic grievances that brought him to power.

Boric is already off to a better start than others in the region this year. His ultra-conservative opponent, José Antonio Kast, who defended the legacy of dictator Augusto Pinochet and described himself as a firm hand against crime and immigration, quickly acknowledged his defeat and promised a “constructive collaboration”.

That’s good news for the democracy that is still grappling with the divisions exposed by street protests in 2019. Help Boric won with a decisive 56% of the vote in Sunday’s second round, and with the most impressive turnout since. that in 2012 voluntary voting was implemented.

However, the stakes for his presidency remain extremely high. Chile, long a regional symbol of prosperous moderation, can hardly afford the kind of radicalism Boric once dabbled in. Markets will be watching the world’s largest copper producer closely for new signs of an anti-capitalist turn. And other polarized electorates in the region, including in Brazil and Colombia, may well see the new Administration as a model, either to copy or avoid it.

Boric now has to reconcile the generous new social contract he promised with the economic realities of rising inflation and the sharp slowdown in growth. You also need to hear from the uneasy voters who pushed Kast from the margins into the second round of the presidential race, most of whom want better services, but not revolution. Meanwhile, he faces a divided Congress, as well as the uncertainty that comes with a new Constitution, which will be presented to voters next year.

It should start by building a broad coalition to advance its social and economic agenda, bringing in centrist advisers to counter its relative inexperience. A good first step would be to select a finance minister from his recently expanded team of economic advisers, which includes former central bank president Roberto Zahler.

This election will be vital to reassure investors and savers who have taken cartloads of money from Chile in the last two years (US $ 8.8 billion only in the six months to August, according to the central bank), changed deposits in pesos and raised the borrowing costs. Boric must show that while he is a frequent critic of Chile’s centrist parties, he can still work with them.

It is critical that he also show that his promises to improve basic services, stabilize pensions and accelerate redistribution efforts will not come at the expense of the fiscal restraint that has set Chile apart for so long. It’s hard to see how you can avoid a larger budget deficit in the short term, but you can demonstrate a commitment to prudence in the long term.

Only then will Boric be able to move on to the other priorities set in his campaign, including education, labor laws and health. There are also migratory challenges and confrontations with the Mapuche people, the largest indigenous minority in the country, located in the southern zone.

None of this will be easy. But Boric has shown a willingness to reach consensus and adapt, approaching the centrists and acknowledging mistakes. By building bridges, you can expect to make some headway and set a welcome precedent. By pleasing the extremes, you can only make excessive promises and insufficiently deliver.