Chile's Most Wanted

Latin Trade, May, 1999 by Greg Brown

Former dissident Ricardo Lagos is the leading candidate to become the country's next president.

IN 1988, CHILE WAS BARELY STIRRING after a decade and a half of dictatorship, when dissident Ricardo Lagos rocked the nation like an earthquake. Appearing on a live national TV program, he unexpectedly turned to the camera, pointed his finger at General Augusto Pinochet and ripped into him for reneging on his promise to step down before an upcoming simple yes-no vote to extend military rule another eight years. "And now, you promise the country eight more years, with torture, assassination and violation of human rights. To me, it seems inadmissible that a Chilean is so ambitious for power as to pretend to hold it for 25 years," he said, igniting the incipient campaign to oust the leader. Only months later, newspaper headlines worldwide screamed, "Chile says 'No' to Pinochet." The transition to democracy was suddenly under way.

A decade later, history's pages are turning once again before the nation's very eyes. In London, Pinochet, at age 83, is facing possible extradition to Spain on charges of genocide and torture, leaving Chile with an unexpected political vacuum. After all, even under democratically elected governments, the aging general has been a central figure in the country's political landscape. If political polls are to be trusted, Ricardo Lagos Escobar--the 61-year-old with a Ph.D. from North Carolina's Duke University, a career academic who became an anti-Pinochet lightning rod, then a post-regime minister--will be the next president of Chile.

Presidential elections are in December, but Lagos has led the polls for the past year. He must first defeat a longtime rival, Senate President Andres Zaldivar (a weak third in polls), in the Concertacion coalition primary on May 30. The winner faces a concerted effort from the opposition in the form of Joaquin Lavin plus a protest candidacy from Arturo Frei Bolivar, a right-leaning coalition leader considered a dark horse and a distraction for Lavin, a young conservative mayor and unabashed Pinochetista. "A change in leadership is indispensable," says Eugenio Tironi, president of Santiago marketing firm Tironi & Associates and a political columnist. "Lagos, and Lavin in his own way, represents that kind of leadership."

So who is Ricardo Lagos? "That's a good question!" laughs Lagos himself. But the graying protester-turned-bureaucrat paints himself as a force for change in the tough early days of the transition back to democracy. Asked who he is not, Lagos' reply is clearly tailored to belie fears of again placing a socialist in La Moneda, Chile's presidential offices, a quarter century after the coup that ousted Salvador Allende: "I am not a sectarian. I am not an ideologue. I am what you would call, in the United States, a liberal."

Like other parts of the world in recent years, Chile seems to be questioning the conservative agenda. The Chilean "economic miracle"--cheered from Washington to Hong Kong and openly admired and copied by emerging economies across the globe--is clearly losing its luster. A decade of brilliant 7% average annual expansion with moderate inflation and a stellar 22% savings rate hides a steady decline in growth rates in recent years (see chart). The economy is facing a serious brake on its progress: poor roads, bridges and ports, under-qualified workers and a strained public-health system. According to local estimates, Chile needs to spend some US$20 billion on infrastructure, which in its present state is costing the nation almost $2 billion annually due, among other things, to transport delays and illnesses related to poor water quality.

Riding a fine line between social healer and hard-nosed pragmatist, Lagos has managed to poll big numbers from the left while simultaneously talking of partially privatizing the last bastion of Chile's former union-heavy statist economy-Corporacion Nacional del Cobre (Codelco). His promise to open the state-run copper giant to private investment is clearly a political move to reduce the power of the Chilean military, which, by law, receives 10% of Codelco's nearly $3 billion in annual revenues. Nonetheless, the initiative is also a clear signal to investors that Lagos is market-oriented.

The message: Spending on infrastructure, health and education is critical, even if he must sell the nation's crown jewel, Codelco, to fund his programs. "I want to be pragmatic: How do we obtain more resources for the government?" says Lagos, who was Chile's public works minister until last year. "[As minister] I authorized criteria for private investment in infrastructure at levels never before seen in Chile, and I did it for the country. We had to double investment in infrastructure and, taking into account only public financing, we couldn't even consider it."

The last socialist. If it sounds like Lagos is preaching, that's because he is. Credibility on economic issues is essential to his chance at victory. The last socialist to sit in the presidential palace, La Moneda, died there, a little more than 25 years ago. Former President Salvador Allende's policies had the downtrodden at heart but the results were disastrous. Inflation zoomed to 1,000% and the economy staggered as profitable private firms and lands were forcibly taken. It seemed clear to many in Chile and abroad that the country was a hair away from becoming the next Cuba.