Via Financial Times

Scarcely a week before Chile suffered its worst civil unrest since Augusto Pinochet’s dictatorship unravelled in the 1980s, President Sebastián Piñera — in an otherwise optimistic interview about his country’s prospects — delivered a warning.

“We need to make a great effort to include all Chileans,” the billionaire former businessman admitted, even as he pointed out that the country was “leading the growth [league tables] in Latin America”.

But Mr Piñera did not expect such a rapid, violent demonstration of the risks of inequality. Santiago has been convulsed by riots, looting and arson, triggered by a 3 per cent rise in metro fares that the government has been forced to suspend. The protests exposed deep-seated anger among Chileans that an unequal system has excluded them from the country’s remarkable economic performance in recent decades.

“You politicians, did this really have to happen so that you stop robbing money from the people?” asked a woman gesticulating to a television camera as she helped clean one of Santiago’s metro stations vandalised by protesters.

“Something deep is happening in Chile,” said Marta Lagos, a pollster and political analyst in Santiago. A huge portion of Chile’s population felt left behind, she said.

“This is not just a bunch of violent kids, it’s much more than that. This is just the tip of the iceberg. That produces a very volatile situation that everyone was ignoring.”

TOPSHOT - A demonstrator waves the Chilean national flag during a protest in Santiago, on October 20, 2019. - Fresh clashes broke out in Chile's capital Santiago on Sunday after two people died when a supermarket was torched overnight as violent protests sparked by anger over economic conditions and social inequality raged into a third day. (Photo by MARTIN BERNETTI / AFP) (Photo by MARTIN BERNETTI/AFP via Getty Images)
A demonstrator waves the Chilean national flag during a protest in Santiago on Sunday © AFP via Getty Images

The government has failed to understand the impact that high levels of inequality and precarious employment have had on society, according to Ms Lagos.

“Piñera thinks [the protests] are a security issue, a problem of violence and looting. He doesn’t realise that there is a profound social malaise which will persist . . . It cannot be fixed with a curfew,” she said, referring to emergency measures taken to control the protests over the weekend. 

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There have been three deaths so far from the unrest. One person was gunned down by security forces and two more died in a fire as they were looting a supermarket on the edge of Santiago. 

Now, Mr Piñera’s centre-right government, whose lack of a majority in Congress has prevented it from implementing many of its pro-market reforms, is in danger of encountering even greater obstacles from an emboldened opposition.

“The Piñera government is now a lame-duck government. It is not going to be able to push its reforms through Congress,” said Patricio Navia, a political scientist at New York University.

While an all-important pension reform may eventually be approved, he added, that is only because Mr Piñera’s bill will be watered down to such an extent that it will probably closely resemble a proposal by the previous centre-left government. 

A worker cleans up a supermarket looted during protests in Santiago, Chile, Sunday, Oct. 20, 2019. Chilean President Sebastián Piñera on Saturday announced the suspension of a subway fare hike that had prompted violent student protests, less than a day after he declared a state of emergency amid rioting and commuter chaos in the capital. (AP Photo/Esteban Felix)
A worker cleans up a supermarket looted during protests in Santiago on Sunday © AP

Eugenio Tironi, a political consultant in Santiago, compared the protests over the past week with the gilets jaunes movement that erupted in France last year, triggered by a rise in fuel prices. 

“In Chile, it was not exactly a disproportionate rise in tariffs. It was the kind that has happened regularly in the past . . . but it adds to a more generalised feeling that salaries are not keeping up with the rising cost of living, especially as debt burdens increase,” he said. “This is far from over. It is huge.” 

Although Ecuadoreans have also been rioting over austerity measures in recent days, the protests in Chile are different, said Mr Tironi. “At least in Ecuador there are clear movements against the government. Here there is none of that.”

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He argued that, like the gilets jaunes, the Chilean protests were more spontaneous and decentralised. 

That has made it harder for security forces to prevent the violence, although Mr Navia said it was a mistake not to empower the military with the ability to use force as necessary after declaring a state of emergency on Saturday.

This may have exacerbated looting, which Michelle Bachelet’s government was able to control after a big earthquake in 2010, he said. Television images showed looters over the weekend leaving shops with bottles of alcohol, televisions and even fridges. 

Mr Navia drew parallels between Chile today and Venezuela 30 years ago on the eve of the “Caracazo” riots caused by fuel price increases that were part of an IMF austerity plan. Those paved the way for the rise of Hugo Chávez and his economically disastrous “Bolivarian revolution”.

Like Venezuela then, he said Chile today is “the most stable economy in Latin America, but it has three problems: high inequality, a high dependence on one commodity, and an increasingly distant and corrupt political class”.

While Chile’s challenges today may not be as serious as Venezuela’s 30 years ago, Mr Navia warned against the notion that Chile’s graduation into the OECD club of rich nations may put it into a superior class. “In reality, Chile still has very Latin American problems.”