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Highlights from the presidential election of Chile & changes would bring to the World

Highlights from the presidential election of Chile & changes would bring to the World

Whatever happens around us, be it in the economy, or in socio-political spheres, and the international arena has a large influence on our thoughts and lives.

Recently, Chile, a Latin American nation had its Presidential elections and it has elected Chile’s youngest President, Gabriel Boric, of 35 years old. He is the second millennial to lead in Latin America after El Salvador’s Nayib Bukele. Boric claimed 55.8% of votes to defeat Antonio Kast who got 44.1% votes. Mr. Boric’s inauguration will not take place until March 11, 2022.

This election, candidate, and campaign are worth studying due to the highlighting changes, ideas, events, and perspectives. It also portraits a minuscule picture of governance opportunities and challenges that countries across the world would encounter in the future.

Young leadership

On the day, Mr. Boric won his election to meet the citizens he had to jump over a fence to get to the podium. And, he did it without any hesitation. As rightly reported by the journalists, this was a step to welcome millennial politics, the Chilean style. It also showed to the Chilean and the world that there will be less formality and stringent protocol to be followed under his new governance. His fierce speech indicated that young generations certainly know what they want and know how to get there. The goal is to set the right intentions to work for the people which of course, has to be followed by the actions taken. The juvenile in Chile was found to celebrate his win on a large scale. His style of working and governing would be something worth witnessing.

Humans at the centre of development

In his campaigns, Mr. Boric has talked a lot about reforms and changes that he wants to bring for the people of Chile, for their benefit. Boric’s progressive campaign includes ambitious promises which reflect the momentous generational shift underway in Chile. He has pledged to raise taxes on the rich to fund public spending and welfare programs. Civic involvement and confidence in the government have also declined, as the centrist duopoly that dominated politics left voters feeling increasingly detached from politics.

He wants to hike taxes, curb profitable mining operations, and reserve half the seats on corporate boards for workers. He is increasingly listening to more moderate economists newly integrated into his camp; their rational policy prescriptions may prove politically impossible precisely because of the environment Mr. Boric has helped to create. According to experts, Chile faces no serious problems minor reforms couldn’t fix.

Mr. Boric has promised to govern for the benefit of all Chileans, not just those who voted for him. This will also mean broadening his coalition if he wants his legislative programme to be approved and enacted.

The current constitution of the country was written during the military dictatorship in 1980. The country couldn’t move forward with this constitution if want a more equal country. There was a political agreement from all forces, including Boric. It has huge support. But now there is a constitutional convention writing the draft. And in six months from now, there will be another referendum to approve or reject the draft. If the referendum is lost and the draft is rejected, it will be very hard for Boric to move forward with his reforms. So for Boric, it’s vital to approve this constitution.

The willingness of people to change would play a vital role in the reforms that he wants to bring for the nation.

Reducing inequalities

Once the most stable economy in Latin America, Chile has one of the world’s largest income gaps, with 1 percent of the population owning 25 percent of the country’s wealth, according to the United Nations. While the economy grew robustly, the economic gains tended to be concentrated at the top of the income distribution and clustered in coastal metropolises. Even though Chileans’ relative standard of living continued to increase over the same period, its Gini coefficient, its measure of wealth concentration, declined at the same time.

Mr. Boric has promised to address this inequality by expanding social rights and reforming Chile’s pension and healthcare systems, as well as reducing the work week from 45 to 40 hours, and boosting green investment.

He also wants to make Chile more inclusive than ever before. Mr. Boric confirmed that his cabinet will be gender-equal, saying that “women will be protagonists”, and that he hopes to incorporate those from beyond Santiago to recognize the “diversity and heterogeneity of our country”.

Natural resources and Economy

Mr. Boric prioritizes a green, sustainable post-pandemic recovery. The president-elect also promised to block a controversial proposed mining project which he said would destroy communities and the national environment.

Chile is the world’s largest copper producer. Chile’s economy is highly dependent on international trade, which represented 56.8 percent of the country’s GDP in 2019. The country mainly exports copper which accounts for nearly half of its exports.

Source: Chilean Foreign Trade in Figures, Santadertrade.com

As can be seen from the table above, Chile’s export basket consists of natural commodities. Therefore, before putting restrictions on it the Boric government will have to study the economic impact of the same on the economy and people involved.

Its top export partners are China (32.4 percent), USA (13.6 percent), Japan (9.1 percent), South Korea (6.7 percent), and Brazil (4.5 percent). Chile’s import partners are China (23.8 percent), USA (19.3  percent), Brazil (8.1 percent), Argentina (5.1 percent).

Given the pandemic and the economic recession, Chile has been through in the past two years, capital flight is rampant. Chile’s currency, the peso, plunged to a record low against the US dollar after Mr Boric’s victory. Stock markets fell by 10 percent, with mining stocks performing particularly badly. Investors are worried stability and profits will suffer as a result of higher taxes and tighter government regulation of business. The Boric government will have to perform a fine tuning between economic progress and environmental protection. This would reflect in building the relationship and trust with investors which would make sure that the economy receives funds for welfare and developmental purposes.

Changing international dynamics

Mr. Boric winning the election has been a welcoming change for several countries. Leaders across Latin America and the Caribbean congratulated the new President-elect.

Mexico’s government has invited Chilean President-elect Gabriel Boric to visit, as the two countries vowed to forge a “strategic alliance” once the new leader takes office. Iran is contending with the fact that Mr. Boric has duly recognised the Palestine community in the country. Some reports are paving Chile’s way towards socialism.

Its top trading partner, China is yet to give any reaction to the new changes that Mr. Boric aims to bring in for his country that can directly impact their trade relationship.

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