Sunny days in Santiago, Chile see throngs of lunch-hour pedestrians pushing their way into cafés and restaurants along streets jammed with the latest models of foreign cars. The city center is studded with huge shopping centers and high-rise office towers made of glass and steel. The display of prosperity reflects Chile’s thriving economy, which boasts full employment, low inflation, and record exports of copper, gold, fruit, wine, seafood, and cellulose. According to the International Monetary Fund, Chile is Latin America’s star performer, with annual economic growth averaging five percent over the last two decades. The country’s success is the result of a free market, a private enterprise system that stimulates investment,and a public sector that maintains tight fiscal discipline. It was thus no surprise when, in 2010, Chile became the first South American country invited to join the Organization of Economic Cooperation and Development.

But the country’s economic success has not been enjoyed by all Chileans. The World Bank calculates that 15 percent of the population, or 2.5 million Chileans, live below the $2-a-day poverty line. Although that is half what it was 20 years ago, social critics argue that more of the country’s poor could have benefited from the recent economic boom. Today, protestors demand more public spending on education, housing, health rights, and rural land recovery programs, which, they say, would ease the burden on the worst off. The glittering streets of Santiago are frequently choked with demonstrators, mostly students,who demand free university education for all. To be sure, there is far greater access to higher education in Chile now more than ever before: over one million students are enrolled in universities today -- a significant increase from the 250,000 enrolled before 1990. This is mostly thanks to the creation of more than 20 new private universities across the country. But increased access has provoked protests from student organizations that claim tuition fees and student loans violate the constitutional entitlement to free public education.

In southern Chile, a richly forested region, militant indigenous activists have burned down vast commercial tree plantations in areas they claim are their ancestral home. Elsewhere, political agitators paralyze large private hydroelectric dam projects, which could flood farmland, disrupt fishing, and push out local communities.

The complaints seem varied, but underlying them is one commonality: opposition to the brand of capitalism that Santiago has embraced since the 1990s, when democratically elected politicians replaced the military junta. Initially, the democratic governments increased social spending and aided the country’s poorest citizens. Chile’s current president Sebastián Piñera has continued to give subsidies for the poor but his economic team has focused more on boosting private investment and labor productivity in order to foster growth and create jobs. Leftwing protestors call for greater government control of the economy, which is in direct conflict with the government’s desire for free enterprise and a privatization process.

Piñera was elected in 2010 thanks to an alliance between Chile’s two major centrist parties, Renovación Nacional and Unión Demócratica Independiente. His election ended the 20-year rule of the anti-military alliance called Concertación: a loose coalition of the Socialist, Christian Democratic, Radical, and other smaller parties, including the Communist. Weakened by corruption and administrative blunders, the Concertación was no match for Piñera and his promise of economic and social reform. He won the election with the support of 54 percent of Chile’s nine million voters-- marking the country’s political shift to the center-right.

But just before Piñera took office in 2011, a major earthquake devastated Chile. In office, his primary concern thus became rebuilding damaged infrastructure, schools, hospitals, and homes at a cost of about $20 billion. For the most part, the Piñera administration has done an outstanding job of reconstruction. In the most affected areas, new highways and bridges have been built. Two years of preschool education for all children is now mandatory, and schools have been constructed in every town, extending education to tens of thousands of children. Piñera argues that these policies are more important than offering free university education to students from wealthy families. But the administration has been clumsy in countering political attacks from the left. The opposition controls a majority in the bicameral congress, and Piñera has been forced to drop key ministers who have been targeted by the opposition. Four ministers of education have resigned, including Harald Bayer, a highly respected nonpartisan technocrat who was impeached by congress because he did not promote nonprofit regulations in private universities. The principal labor organization, controlled by opposition parties, has called for widespread strikes to support student demonstrations and demand higher wages.

The massive demonstrations and local conflicts over environmental issues have intimidated the Piñera administration as well. The government has postponed big hydroelectric construction projects that are vital to the copper mining industry and attract foreign investment. In dealing with violent protestors, the government has avoided using forceful police action because it fears political backlash and charges of violating human rights. Many Chileans still remember the 1973 military overthrow of the left-wing President Salvador Allende and the subsequent violent repression of dissidents. As a civic-minded businessman, Piñera voted against General Augusto Pinochet in the 1988 plebiscite that ended military rule, but the governing center-right alliance includes many officials who worked with the Pinochet government. And the left seems more interested in exploiting the electoral advantages of recalling this memory than they are in finding common political ground.

Thus, the political lines are already sharply drawn for the upcoming presidential election in November. The race has recently started -- sparked by the return of former President Michelle Bachelet, who spent the last three years as director of women’s affairs at the United Nations. She is favored in early polls because she is a familiar face and promises to attend to the socially needy. Against this populist opposition candidate, the governing coalition has not brought forth a strong candidate to succeed Piñera. Under the Chilean constitution, Piñera is barred from running for re-election. Thus, the center-right alliance will have to find a new leader, most likely Pablo Longueira, who was the minister of economy under Piñera, or Andrés Allamand, a former senator and youthful rugby player who was Piñera’s defense minister. Both say they will be enthusiastic continuers of Piñera’s economic and social programs. Longueira might be the stronger candidate to face Bachelet, because his party has support in many low-income communities where Longueira previously worked as a community organizer.

Chile has always been a bellwether in Latin American politics. It had the first Christian Democratic government in the region under Eduardo Frei in the 1960s. Then, it had the first elected socialist government in Latin America under the Popular Unity government of Salvador Allende. And it successfully returned to democratic governance after a long military dictatorship. Now, the coming election will test whether Chile’s middle-class majority will continue to support a government that has brought economic benefits through a dynamic free market and private enterprise system, or will instead turn to a more socialist and populist program that will focus more on social needs and the security of public-sector jobs. This is the political dividing line now in Latin America, where countries are struggling to find the best way to achieve economic prosperity and social equality. Thus, Chile’s choices will be closely watched in the region. 

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  • JUAN DE ONÍS is a former correspondent for The New York Times and the Los Angeles Times and the author of The Green Cathedral: Sustainable Development of Amazonia. He lives in Brazil.
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