Leftist elected as Millennial President in Chile after chasing higher taxes, greener economy and more equality

Leftist Gabriel Boric was elected Chile’s president on Sunday by a larger-than-expected margin, giving him the mandate to push for higher taxes, greener and more equitable industries after An election focused on grievances about an investor-friendly economy has left many people behind.

The alumni rally leader won 56% of the vote, beating conservative rival Jose Antonio Kast by 44%. This victory has the potential to terrify markets fearful of interventionist policies. Boric, 35, will take office in March as one of the world’s youngest presidents and with an ambitious agenda.

His victory not only paved the way for a generational change, but also the biggest economic changes in decades for one of Latin America’s richest nations, a favorite financial market. globally. It was a highly polarizing campaign and was only tweaked in the late stages as both opponents attracted centralists. He will face enormous challenges including a divided parliament, severe economic decline, the drafting of a new constitution and the lingering threat of social unrest.
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“We cannot continue to let the poor pay the price of Chile’s inequality,” Boric told thousands of cheerleaders in a fiery victory speech, acknowledging all that he had done. need to do to build alliances. “We will reach out and build bridges so our citizens can live a better life.”

He repeated something he said to President Sebastian Pinera during their conversation that aired after the results were announced: “Agreements need to be made between all Chileans and not done behind closed doors.”

They will meet on Monday to begin the transition. Kast quickly admitted and spoke to Boric on Sunday night.

Streets across the country of 19 million were filled with car horns and waving banners to celebrate the change of guard. Voter turnout was around 56%, nearly 10 percentage points higher than last month’s first round.

But Boric’s early focus on outreach has an undeniable logic. In seeking a series of radical changes, he needs to forge an alliance with hard-line centrists and leftists who have been at odds for decades.

“He will face a divided parliament, so passing legislation will be difficult and will require strong negotiating skills,” said Jennifer Pribble, a professor of political science at the University of Richmond. and practicality”.

Boric describes himself as a moderate socialist who shies away from hardline leftist models in Cuba and Venezuela. However, Kast and his supporters warn that Boric’s alliance with the communist party is a risk.

“This is the worst scenario the market can imagine,” said Klaus Kaempfe, portfolio solutions manager at Credicorp Capital in Santiago. “They have been waiting for a vote that more closely shows a desire for dialogue.”

In a research note, Credicorp said the peso could fall about 4% on Monday to between 875 and 885 per dollar while stocks could drop 10%.

Pinochet Throwback

Boric supporters see Kast as a dangerous opponent to General Augusto Pinochet’s right-wing dictatorship due to his emphasis on public order and conservative social factors.

Boric, who is unmarried, bearded and tattooed, first rose to prominence a decade ago when he led nationwide protests calling for free and high-quality education. He successfully ran for deputy in the lower house in 2013 and was re-elected to a second term in a landslide vote.

His emphasis on social justice eased a period of unrest that erupted after a massive transit fare hike in 2019 and quickly became a broader movement demanding health care, transportation, and health. public transport and better pensions. During the election campaign, Boric often swore that, “if Chile is the birthplace of neoliberalism, it will also be its grave”.

Boric wants to remove some pillars of the Chilean economy such as its privatization retirement, which forms the basis of local capital markets. He favors higher taxes on both the rich and the nation’s key mining industry – Chile is the world’s largest copper producer – while also promise to control government debt.

In March, Boric will take the helm of a country facing unprecedented political upheaval. Social unrest started the drafting process new constitution, currently being carried out by a left-wing panel, will be put to a national referendum in 2022.

He will face a halt in economic growth, slowing from a record high of nearly 12% this year to a level near 2%, according to the central bank. Policymakers are also rapidly raising interest rates to curb soaring inflation, and while Chile still has a relatively stable fiscal account, the debt-to-GDP ratio has risen rapidly amid global spending. Translate.

Chilean companies and individuals have transfer money overseas at a historic clip over the past few years, weighing heavily on currency.

Regionally, Chile’s elections follow Pedro Castillo’s victory in Peru earlier this year and give impetus to leftist candidates in Colombia and Brazil, which will hold general elections. system next year. Like Chile, both countries are facing increasingly polarized politics.

“The president-elect of Chile could become the face of Latin America’s new left, inspiring other candidates,” said Oliver Stuenkel, professor of international relations at the Fundacao Getulio Vargas in Sao Paulo. in the area.

–With support from Sebastian Boyd and Eduardo Thomson. Leftist elected as Millennial President in Chile after chasing higher taxes, greener economy and more equality

Aila Slisco

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