Chile — from neoliberal to social policy experiment?

In its second week of unrest, Chile, long seen as Latin America’s ‘economic miracle,’ is quickly becoming ground zero for social policy reform. Is change possible?

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October 31, 2019
A demonstrator waves a Chilean flag during a protest against Chile's government in Santiago, October 30, 2019. REUTERS/Jorge Silva

Last Friday, as a sea of more than a million people started to swell along Santiago’s main street, La Alameda, a crowd of several dozen stood in front of the columned, neoclassical national library building. The group held guitars all shades of wood — brown, red and yellow — and began strumming a familiar tune.

“Our song is a fire of pure love,” the crowd sang along in Spanish, “It is the universal song. The chain that will triumph. The right to live in peace.”

Repeating that final line of a song by folk legend Victor Jara — who was tortured and killed just days after the 1973 coup — the guitarists held their instruments above their heads: “El derecho de vivir en paz.” The crowd cheered.

The scene was one of many moving and dramatic moments Chile has witnessed since October 18, when a student protest over a transit fare increase triggered a chain of events, including cases of looting, arson and a heavy-handed military crackdown — unrest unseen in the South American country since its dark days of dictatorship.

Images and videos widely shared on social media show a country, especially its capital city, turned upside down. There have been many peaceful demonstrations, like the one last Friday, but also moments of disruptive and violent chaos.

According to the national human rights institute, as of Tuesday night, at least five deaths have been attributed to the military and police, though there have been at least 18 confirmed deaths related to demonstrations. The institute also said more than 3,700 people have been detained, including 400 children and teenagers. Well over a thousand injuries have been reported, including a high number of eye injuries, along with dozens of cases of sexual assault and torture by armed forces.

The UN High Commission for Human Rights announced a fact-finding team was arriving this week and would stay until November 22 to investigate complaints of human rights violations.

Chileans are not only asking for “the right to live in peace;” they have been loudly and urgently calling for economic transformation, for a new “social contract,” for the resignation of several key government figures, including the president, and, increasingly, for a new constitution.

Despite being touted as a Latin American economic success story — Chile became the first South American member of the Organisation for Economic Cooperation and Development in 2010 — the country has the highest levels of inequality in the OECD, slightly worse than Mexico. There was a 120 percent growth in average wages between 1990 and 2015, yet wage inequality remains high, and the monthly minimum wage in the country is currently US$413. Pensions managed by private firms are often even less per month. Access to housing and education is also highly unequal.

In other words, those with money — one percent of the country earns 33 percent of its wealth, according to the UN — live in a completely different Chile.

“Chilean society is tired of the indolence of the ruling political class, of an economic model that exploits workers, of poor wages, of undignified pensions,” said Ana María Gutiérrez, a political science professor at Chile’s Universidad Central in Santiago. “This social movement — which is made up of all citizens — is aware that this is the window of opportunity in which political and social changes can be realized.”

President Sebastian Piñera, who came under fire for being too quick to declare a state of emergency and impose a curfew, and for turning a blind eye to state violence, made several policy announcements in haste last week, including proposals to raise pensions and minimum wages. On the weekend, he lifted both the state of emergency and the curfew. On Monday, he announced the replacement of eight cabinet members, including Interior Minister Andres Chadwick and Finance Minister Felipe Larrain.

Then, in a surprise move, Piñera announced Wednesday morning that Santiago would be pulling out as host of two upcoming international meetings — the Asia-Pacific Economic Cooperation (APEC) leader summit on November 16 and 17 and the UN climate change conference in December, which would have brought thousands of participants, including activist Greta Thunberg, to the city.

“This is a very difficult decision, which has caused us a lot of pain, because we fully understand the importance of APEC and COP for Chile and for the world,” said Piñera. But, he added, the government’s main priorities are to restore public order, and to promote a “new social agenda” and a deeper dialogue among citizens.

However, for now, demonstrations continue. “The feeling is that nothing has been won yet… No law has been passed in parliament,” Gutiérrez said. “The military is no longer on the street, but human rights violations continue to be committed by police. And no one is talking about the disappeared.”

As Canadian writer Naomi Klein wrote on Twitter earlier this week: “This generation of Chileans is so determined.”

‘Not 30 pesos, 30 years’

Klein’s comments on the situation aren’t out of left field.

While Chile’s protests may be part of a wave of anti-government demonstrations happening globally, from Ecuador to Lebanon, the country has a distinguished past. It was what Klein called in her 2007 book The Shock Doctrine the first “live laboratory” of US-sponsored neoliberal economic policy, conveniently imposed on the country after General Augusto Pinochet overthrew democratically elected president Salvador Allende in 1973.

Under the Pinochet regime, which included University of Chicago-trained economists, Chileans were doubly shocked with physical violence and an economic overhaul that slashed social spending and embraced privatization.

While tens of thousands were detained, tortured, killed and disappeared, most of Chile’s state-owned companies, its education and healthcare systems, its pensions, and water were turned over to the private sector.

Klein’s book has been regularly referenced this past week, with protestors calling on Chileans to say no to the “doctrina del shock.” For even though democracy returned to the country in 1990, Chile’s 1980 constitution, drafted under Pinochet and criticized for giving elites too much power, remains.

“It’s clear that Chile never was the laboratory of ‘pure’ free markets that its cheerleaders claimed,” Klein wrote in 2007. “Instead it was a country where a small elite leapt from wealthy to super-rich in extremely short order.”

Yet the myth of its success has persisted — and the Chilean economy has served as an example to emulate, in Latin America and elsewhere. Just earlier this month, Piñera compared the country to other cases of global instability, calling it a “real oasis.”

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Demonstrators shout at soldiers on the second day of protests in Santiago, Chile, October 19, 2019. REUTERS/Ivan Alvarado

It did appear to be, from the outset. The relative peace, stability and prosperity of the country has made it an attractive destination for tourists and international actors. Chile has long been home to regional offices for international bodies, such as UNESCO, for foreign companies, especially in the mining sector, and for continental media agencies, such as BNamericas, a business news wire service headquartered in Santiago. When music festival Lollapalooza decided to take the event outside of the US for the first time in 2011, it chose Santiago. When The New York Times listed the capital city as its number one place to go that year, it described “a buttoned-up place,” with “modern museums, smartly designed hotels and sophisticated restaurants.” The international Baha’i community chose Chile as the site of its first South American temple, which opened there in 2016.

But behind its idyllic public image, a population left behind has grown increasingly angry. Large protests of many kinds have taken place since the return of democracy, including those against the education system in 2006 and between 2011 and 2013; a feminist movement in 2018; ongoing protests against the treatment of its Indigenous Mapuche people; and, most recently, large demonstrations in support of climate action. But nothing has come close to what has happened this month.

“This is the accumulation of many marches and protests,” said Lake Sagaris, a Canadian writer and urban planner who has lived in Chile since 1981. “I suspect, given the size [of] the outrage at the human rights violations and the government’s evident clumsiness and total sense of impunity and irresponsibility, that this won’t stop until real changes are guaranteed.”

What began as an initial protest of a transit fare hike of 30 pesos — just four cents US — unleashed anger against decades of unequal distribution of wealth. Piñera, himself a billionaire businessman, sent in the military after several metro stations were set on fire. The crackdown enraged crowds even further. As one of the many slogans to emerge goes, it’s not about 30 pesos, it’s about 30 years of abuse of power.

“There are two crises here: the socio-economic inequalities, yes, but at the root, the appalling lack of genuine democracy, participation and control in virtually every significant aspect of social life,” Sagaris said. “This is particularly true for city — and transport — planning, which affects people every day, and which has steadily avoided any approach to citizen involvement… The indifference of all governments led to this crisis. In many ways, it was inevitable.”

A case of international interest

Wednesday’s cancellation of two international events will likely prompt further global attention to the country (no doubt it is also sending organizers, especially of COP25, into a frenzy. The UN said Wednesday in a very short statement it is now “exploring alternative hosting options”).

“I think the president was trying to avoid international embarrassment. He didn’t want other countries to have to cancel first,” Gutiérrez said.

Global Affairs Canada had confirmed to OpenCanada last week that Canada would be represented at November’s APEC meeting, but it is unclear now if or where the meeting will take place.

On Tuesday, the prime minister’s office said Piñera called to congratulate Justin Trudeau on his re-election. The two “reaffirmed their commitment to ongoing cooperation” and “exchanged views on key regional issues, including the importance of addressing people’s concerns around economic opportunity and inequalities.”

But while global leaders have largely refrained from commenting on events, others in the human rights, academic and Chilean expat communities have been speaking out in support of policy reform and the safety of Chileans.

“If they do not commit to in depth systemic changes, people will take the streets again. It took three decades to overcome the fear the dictatorship left as a legacy and walk courageously in the streets, demanding their right to a better life,” says Renata Avila, a Guatemalan international human rights lawyer and a director of Ciudadanía Inteligente, which monitors and promotes democratic participation across Latin America. “My main concern right now is the escalation of violence… It is a tragedy that, in one of the most peaceful countries of the region, in one week under military control, there are lives destroyed forever.”

Chileans living internationally have demonstrated over the past week in public spaces and outside of Chilean consulates, including in Vancouver, Winnipeg and Toronto. A declaration of solidarity with Chile from academics around the world, 67 of whom are based in Canada, had garnered more than 4,000 signatures as of Wednesday.

“Canadians must remain vigilant against any forms of state violence, the effects of coerced neoliberal and austerity policies, and repression of Indigenous communities,” Sobia Shaikh, an assistant professor at Memorial University in Newfoundland, who signed the declaration, told OpenCanada. “This is particularly true about Latin America, because of the continued US imperialism in the region.”

Université Laval professor Simon Viviers said he signed out of a sense of duty. “I have colleagues and friends who live and work in Santiago or who have lived there,” he said.As educational researchers, they spoke to me specifically about the situation of the education system in Chile, which is largely privatized and has dramatic social inequalities… Universities are privileged places for development and debate of ideas, promotion of education, science and culture. Academics have the responsibility, in my opinion, to strongly fight repression.”

“If they do not commit to in depth systemic changes, people will take the streets again.”

Chile has long been a global outlier. It grabbed much of the world’s attention back when it elected its Marxist president Allende in 1970. Leftists around the world watched, full of hope, while the US government and free-market supporters worried about his influence.

After Allende died during the coup three years later, Canadians lobbied their federal government to bring Chileans to Canada. Around 200,000 fled Chile worldwide; Canada took in around 7,000 in those initial years.

In 1988, after pressure from the international community and a strong movement inside the country, Chile was the site of another unusual event — Pinochet agreed to allow a confidence vote, and stepped down after Chileans voted to not have him remain on. A democratic end to a dictatorship.

Thirty years later, Canadian-Chilean relations now centre mostly around trade, education exchange and environmental policy. (Canadian direct investment in Chile was $21.5 billion in 2018, with Canadian companies in Chile’s mining, utilities and transportation sectors. In 2017, the Ontario Teachers’ Pension Plan was the largest investor in Chile’s water and sanitation services.)

Torontonian Laura Heller knows the bilateral connection first hand. She met her Chilean husband in Canada, after he sought refuge after the coup. Heller happened to be visiting relatives in the southern city of Valdivia when the protests broke out this month. In email sent to OpenCanada, she said that like other cities, Valdivia’s downtown core “looks bad,” with businesses boarded up and grafitti “covering almost every wall.” But, she wrote: “The atmosphere is peaceful with much banging of pots and singing… People are tired of inferior services in public health, education, and long working hours with very little compensation. It is very hard to survive as a working person.”

Back in Santiago, Gutiérrez says she hopes the pressure on government to follow through with policy changes will continue, especially with the world watching. “They want to install a discourse of false normality so that everything ends. However, this time the Chilean people are so tired of the abuses that apparently they will not give a truce.”

What change looks like

In The Price of Inequality, published in 2012, Joseph Stiglitz wrote that, “another world is possible,” one where “markets work like markets — more competitive, less exploitative — and tempering their excesses.” He called for the end of corporate welfare, for tax reform, for improving access to education, restoring full employment and a new social compact.

In the 2015 edition of The Economics of Inequality, Thomas Piketty looked at what public interventions were possible to combat inequality. “Investing is not simply a matter of placing capital where there is none,” he wrote. “Complex choices have to be made, involving what sectors to invest in, what goods to produce, and what people should be empowered to make these decisions.”

Yet despite the many prescriptions already available to policymakers, countries like Chile have long ignored the causes and impact of inequality.

In 2015, United Nations Special Rapporteur on Human Rights Philip Alston visited Chile and warned that poverty levels remained under the radar for many policymakers, and that the solution required not just policy reform but special attention to reduce discrimination and increase civic inclusion.

“It remains to be seen whether the current middle class-driven political and social agenda will pay sufficient attention to the tragedy of those living in poverty,” he said then.

The New York Times, just days after protests erupted in Santiago this month, said the path is now “obvious,” for Chile: “Spend more money improving the quality of life for a vast majority of Chileans, who are exposed to the vicissitudes of a market economy while being denied a sufficient share of the benefits. It is an extreme version of the challenge facing many developed nations, including the United States,” its editorial board wrote.

But why haven’t these lessons been learned by Chile — or other countries with high levels of inequality — despite the long history of warnings?

“Chile is very important for the world because it is an experiment of neoliberal policies introduced in the 1980s. Thus, when in Chile those policies [have resulted] in social failure, like we have today, it is an important message for the rest of the world,” said Claudia Sanhueza, a University of Cambridge-trained economist and director of the Centre of Economics and Social Policy with Chile’s Universidad Mayor. “The message is: inequality undermines social cohesion.”

With those interested in social change watching, and the country’s stability now at risk, Chile’s way forward is complex. The military is off the streets, meeting the most immediate of public demands. Sanhueza said the biggest obstacle now is the constitution; many have called for it to be scraped and a new one written. There is also a need for more inclusive political representation, she said.

Sagaris agreed. Somehow, everyone has to come to the table,” she said. “Perhaps a cabinet for national unity, with all parties… Perhaps the mayors… But then, who will represent citizens? And how will that be organized?”

Gutiérrez said the challenge of a decentralized movement — “which is what happens in postmodern social movements” — is to identify the right voices to represent citizen demands.

“The answer, in my opinion, is found in the territories, in the capital, in the neighbourhoods — in all regions which experience these problems. Through their own social organizations, neighbourhood boards and social leaders — from there, this new social pact is built.”