ECONOMIC GROWTH AND SOCIAL AGENDA TO BE TWIN

C O N F I D E N T I A L SANTIAGO 000370

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/15/2018
TAGS: PGOV CI
SUBJECT: ECONOMIC GROWTH AND SOCIAL AGENDA TO BE TWIN
LODESTARS IN BACHELET'S FINAL TWO YEARS


Classified By: E/Pol Counselor Juan A. Alsace for reasons 1.4 (b & d).

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Summary
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1. (C) Bachelet's domestic policy advisor told the Ambassador
April 16 that the Bachelet adminstration in its last two
years will focus on maintaining economic growth and
completing its social agenda. Principal challenges to the
latter will be in implementation of pension and education
reform, ensuring guaranteed access to health care, and
passing labor reform legislation. Chile's energy deficit
will impact the former. The administration's loss of a
working majority in Congress, while regrettable, will not
severely hobble its legislative agenda. End summary.

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Political Witchhunt
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2. (C) The Ambassador, accompanied by E/Pol Counselor, called
April 16 on Francisco Diaz, President Bachelet's domestic
policy advisor. The television in Diaz's office was showing
the impeachment proceedings against Education Minister
Provoste, on allegations of misuse of public funds, and Diaz
volunteered that Provoste (and Bachelet's governing
Concertacion coalition) was likely to lose the vote scheduled
for later on that afternoon (she did - septel). Diaz noted
that "four of the five" charges against Provoste were
"garbage" but allowed that one - for failing to exercise
proper oversight of public funds - was at least debatable.
And while Diaz made clear he believed even that charge was
without merit, he lamented more the "politically motivated"
nature of the accusations, worrying that it could lead to tit
for tat retaliation, "should the opposition Alianza win the
presidency in 2009, while the Congress remained in
Concertacion hands." The country has more important matters
to attend.

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Four Priorities
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3. (SBU) The Ambassador noted the Secretary had found her
meeting in March with President Bachelet very useful; the
conversation had focused to a considerable degree on the
President's domestic priorities and social cohesion agenda.
What would be the administration focus in its remaining two
years? Diaz said that completing work on the social agenda,
along with maintaining solid economic growth ("at least five
percent"),would be the two principal objectives. Chile's
energy deficit could impact heavily on its ability to grow
robustly, however. The Ambassador observed that he had
discussed with all his GOC contacts USG willingness to
cooperate with Chile in areas such as energy efficiency and
diversification. The U.S. hoped to share its technology and
expertise with Chile in areas such as geothermal and solar
energy, a prospect Diaz welcomed.


4. (SBU) Diaz continued that the administration would focus
on four social agenda priorities. The first two would
involve implementation of pension and education reforms,
legislation already approved by the Congress. Next would be
passing legislation guaranteeing adequate and timely health
care coverage to the poorest Chileans. The fourth would be
reform of labor laws, improving flexibility of rigid laws
that undermine Chile's competitiveness. E/Pol Counselor
wondered if Concertacion's loss of a working majority in
Congress - as evidenced by the impending Provoste vote -
foreshadowed difficulties in passing and implementing
legislation on its social priorities. Diaz noted that the
Concertacion had only had a majority in two (2006-2008) of
its eighteen years in power. It was used to seeking
consensus with the opposition on key issues and would
continue to do so.


5. (C) Comment: Diaz came across as quite sanguine about the
possibility of cooperation with the opposition. He may be
right - opposition figures often tell us their greatest
challenge is convincing the public there is much space
between them and Concertacion on major issues such as
education or pension reform. Nor do they want to appear
overly obstructionist on issues affecting the public weal.
Still, the political debate here has become increasingly
divisive and the Provoste affair may have the opposition and
several disgruntled Concertacion renegades smelling blood,
with less willingness to go along with Concertacion as the
country moves towards municipal elections later this year.

End comment.
SIMONS