BACHELET'S FINAL PRESIDENTIAL ADDRESS HAILS SOCIAL

UNCLAS SANTIAGO 000515 SENSITIVE SIPDIS STATE FOR WHA/BSC, L-DALEY LABOR FOR ILAB - WEDDING AND GAY COMMERCE FOR ITA - MANN STATE PLEASE PASS TO USTR FOR KALUTKIEWICZ AND ROMERO E.O. 12958: N/A TAGS: PGOV ECON SOCI PREL PHUM ELAB KTIA CI SUBJECT: BACHELET'S FINAL PRESIDENTIAL ADDRESS HAILS SOCIAL PROTECTION, BATTLES ECONOMIC DOWNTURN REF: SANTIAGO 432 ¶1. (SBU) SUMMARY: In a May 21 State of the Union speech, President Bachelet hailed her government's achievements in promoting social protection, focusing on improvements in healthcare, housing, and education. She took credit for Chile's deft handling of the global financial crisis and said the country is "in the best position one could hope for" to deal with the crisis. Bachelet announced a new one-time payment of $70 (40,000 Chilean Pesos) for each of Chile's four million poorest in August. Outlining the legislative agenda for 2009, Bachelet will propose three draft laws needed to complete Chile's accession to the Organization for Economic Cooperation and Development (OECD). She said the GOC will "continue to strengthen relations with the United States" and thanked the Congress for passing legislation that will allow Chile to join the International Criminal Court (ICC). The speech generated only token criticism from the opposition -- which has little desire to confront Bachelet when she enjoys an unprecedented 69 percent approval rating. END SUMMARY. TAKING CREDIT WHERE CREDIT IS DUE -------------- ¶2. (SBU) On May 21, President Bachelet used her final Presidential Address (equivalent to the State of the Union speech) to highlight her administration's handling of the global economic crisis. Speaking before the full Congress, Bachelet declared that the crisis vindicated her decision to save windfall copper revenues early in her term. That decision, along with prudent fiscal and monetary management, has allowed her administration to enact countercyclical policies to confront the crisis and cushion its impact on Chile. ¶3. (SBU) Bachelet also argued that the financial crisis validated her decision to focus her presidency on social protection. She explained that her policies have created a network of support that aids the most vulnerable members of society: children, women, and the elderly. She described a wide range of notable social welfare achievements including increased access to healthcare for pregnant women and children, new housing construction that will eliminate shanty-towns by 2010, and stronger labor protection for sub-contracted workers. Bachelet underscored that challenges remain, particularly in terms of institutionalizing reforms. CONFRONTING THE ECONOMIC CRISIS HEAD ON -------------- ¶4. (SBU) Bachelet announced another direct one-time payment that will provide approximately $70 (40,000 Chilean Pesos) to each of four million Chileans in August, noting the paradox that "the crisis of the rich will create more poverty." The new payment supplements a similar measure that gave approximately $70 (40,000 Chilean Pesos) to each of 1.7 million Chileans in March 2009. Bachelet thanked the Congress for quickly approving a law that will provide incentives for companies to send employees on long-term training instead of firing them. She also noted the success of the fiscal stimulus plan passed in January, stating that through April, 34 percent of the $700 million allocated for infrastructure had been spent and 113,000 jobs had been created. ¶5. (SBU) Bachelet revealed several other policies designed to mitigate the effects of the crisis. Pension reforms that were originally scheduled to take place in July 2010 will now be implemented in September 2009, extending benefits to an additional 150,000 people and increasing the minimum pension payment. CORFO, Chile's economic development agency, will offer credit to higher education students to prevent them from leaving school if a parent loses a job. The GOC will also increase subsidies for housing and provide mortgage insurance for those who lose jobs. LEGISLATIVE PLANS FOR 2009 -------------- ¶6. (SBU) Outlining the legislative agenda for her final year in office, Bachelet told the Congress that her administration will offer three draft laws to support Chile's accession to the OECD and present a draft proposal for a national public transportation subsidy. She acknowledged that voting reform would not be implemented on her watch, but she recognized the historic nature of legislation that would make inscription automatic and voting voluntary, reversing the old system of voluntary inscription and mandatory voting. She also called for reforms to the binomial parliamentary system (reftel) and the extension of voting rights to Chileans who live outside the country. (Septel will provide additional information on legislative priorities.) "WE WILL CONTINUE TO STRENGTHEN RELATIONS WITH THE U.S." -------------- -------------- ¶7. (SBU) While her speech focused almost exclusively on domestic issues, Bachelet told the Congress she will continue to "strengthen relations with the United States." She highlighted the Chile-California partnership and strategic agreements in areas such as renewable energy and education. ¶8. (SBU) Bachelet thanked the Congress for approving legislation on May 20 that will allow Chile to accede to the ICC. Calling the approval a "transcendental step in the fight for human rights," Bachelet received sustained applause from the audience. She also cited international praise for Chile's social policies and its strong leadership as UNASUR's first president as evidence of Chile's positive standing in the world. MUTED CRITICISM FROM THE OPPOSITION -------------- ¶9. (SBU) Alianza Presidential candidate Sebastian Pinera responded to Bachelet's speech by criticizing her failure to mention agricultural issues. He also identified crime and poor management of government resources as problems that Bachelet failed to adequately address in her remarks. Other members of the opposition judged the speech as lacking "self-criticism." Instituto Libertad, a conservative think-thank, reported that the Bachelet Administration had only completed 14 percent of its promises from the 2008 Presidential Address, contradicting a GOC claim that it had accomplished 90 percent of its goals. COMMENT -------------- ¶10. (SBU) Promoting social protection has been the hallmark of Bachelet's administration, so it was not a surprise that she used her final Presidential Address to highlight achievements in these areas. Bachelet will likely use her remaining time in office to institutionalize prized social welfare programs. The opposition's response included only token criticism, indicating little desire to confront Bachelet when she enjoys an unprecedented 69 percent approval rating. END COMMENT SIMONS