NATIONAL RENEWAL PRESIDENTIAL CANDIDATE PINERA

C O N F I D E N T I A L SECTION 01 OF 02 SANTIAGO 001547

SIPDIS

E.O. 12958: DECL: 05/17/2015
TAGS: PGOV EAID PREL CI
SUBJECT: NATIONAL RENEWAL PRESIDENTIAL CANDIDATE PINERA
OUTLINES BROAD THEMES OF ECONOMIC PLAN

REF: SANTIAGO 1090

Classified By: A/DCM Andrew Chritton. Reasons: 1.4 (b and d).


1. (U) Summary: National Renewal presidential candidate
Sebastian Pinera claimed, before a largely receptive crowd in
late June, that the administration that succeeds President
Lagos must address deficiencies in economic growth,
education, and health care in order for Chile to become a
developed country. While acknowledging the Lagos
Administration's achievements in macroeconomic stability,
Pinera said the administration's failures in other areas had
prevented Chile from taking full advantage of largely
positive global economic conditions. End summary.


2. (U) Center-right National Renewal presidential candidate
Sebastian Pinera delivered the opening address at a seminar
co-sponsored by AMCHAM and one of Chile's leading
conservative dailies, "El Mercurio," on June 22. The
seminar, entitled "Economic Projects for the Future: Three
Challenges," also featured presentations by economic advisors
to Pinera and the other two principal presidential candidates
(septel). Approximately 200 Chilean and foreign business
representatives attended the event, which received
considerable press coverage.


3. (U) Summary of the key points made by Pinera during his
20-minute presentation:

(A) Thrust: The Lagos Administration without question has
achieved a number of economic accomplishments, particularly
concerning macroeconomic stability. However, there are
several areas requiring immediate attention if Chile wants to
grow and be competitive in the global economy.

(B) Negatives: Pinera identified the following areas where
the Lagos Administration had been deficient:

--Growth Rate: Chile's growth rate over the past 2-3 years
has not been enough to propel Chile to the next level. The
Lagos administration should have taken better advantage of
the favorable economic conditions to grow the economy more.
There are two main reasons why the Chilean economy has grown
more slowly than it did during the last decade: declining
investment (by both Chileans and foreigners),and declining
productivity.
--slow rate of job creation
--increase in unemployment
--declining rate of wage increases
--increase in inequality of wealth
--declining educational standards and quality
--declining availability and quality of health care

On these last two (education and health care),Pinera
asserted that, despite large increases in spending, Chile
ranked low in both areas, given its overall level of
development. Pinera characterized the Chilean education
system as "broken." He said it was incomprehensible that
this system produced such large numbers of students who were
not competitive in the global economy.

(C) Solutions: Pinera (who at this point was running out of
speaking time) rattled off the following steps for Chile to
take to "complete the transition from the underdeveloped to
the developed world:"

--increase growth rate ("four percent will not suffice")
--increase capital investment -- both from within Chile and
from abroad
--increase quality of education
--increase flexibility in the economic sectors and the labor
markets
--reduce poverty
--increase training of the workforce.

(D) Conclusion: Pinera said Chile's future would depend on
the efforts of Chileans, not on outsiders or some grand
"imperial power." "It is in our (Chilean) hands."


4. (C) Comment: Pinera's remarks were filled with statistics
and sophisticated economic terminology. The forum and
audience were tailor-made for him, and allowed him to show
off his extensive formal academic training (Post Note: Pinera
earned a doctorate in economics from Harvard and has
considerable business experience. End Note.) His criticism
of the state of the Chilean education system, and his call
for greater flexibility in the economic sectors and labor
markets track with comments we have heard from other leading
Chilean economists. Pinera displayed the same degree of high
energy that he has shown on the campaign trail since entering
the presidential race in mid-May (reftel). In the latest
Center for Public Studies poll released July 14 Pinera polled
14 percent, behind Alianza rival and Democratic Independent
Union (UDI) presidential candidate Joaquin Lavin at 21
percent, and Socialist Party candidate Michelle Bachelet at
47 percent.
YAMAUCHI