CHILE: Bachelet and President-elect Pinera Working Towards a

UNCLAS SECTION 01 OF 04 SANTIAGO 000033 SIPDIS E.O. 12958: N/A TAGS: PGOV PREL ECON CI SUBJECT: CHILE: Bachelet and President-elect Pinera Working Towards a Smooth Transition ¶1. (U) Summary: With the inauguration of president-elect Sebastian Pinera less than six weeks away, both Pinera and outgoing president Michelle Bachelet are focused on making the historic transition smooth and efficient. Both sides have appointed transition teams who are working closely to maximize information-sharing and to complete top priorities before the March 11 inauguration. End Summary. Cooperation During the Transition, and Beyond -------------- -------------- ¶2. (U) Both sides, according to press reports, have graciously tried to make the transition work and do what is best for the country as a whole. This historic transition will be the first time in 20 years that the government has had to hand over the keys to the opposition. The last transition of this kind was when Pinochet handed over the offices to President Aylwin's government, and reportedly, information was not shared, drawers were empty, and files had disappeared. The transitions since, which were always from one Concertacion government to another, have been much more informal than the current transition. ¶3. (U) Pinera has said that his presidency will be a "second transition" -- the first being the 1990 transition from dictatorship to democracy -- and has spoken of promoting a second period of a "democracy of accords." The term "democracy of accords" was coined during the presidency of Patricio Aylwin (1990-1994) to describe several legislative agreements between moderate conservatives from Pinera's National Renewal (Renovacion Nacional, or RN) party and the first Concertacion government of Patricio Aylwin. Pinera, then a Senator, was one of the promoters of the "democracy of accords," where RN members of the opposition sought to cooperate with the first Concertacion government. Bachelet's Transition Plans -------------- ¶4. (U) Outgoing president Bachelet has appointed Interior Minister Edmundo Perez Yoma to handle her administration's side of the transition. In addition to Perez Yoma, the team includes Finance Minister Andres Velasco, Undersecretary General of the Presidency Edgardo Riveros and Bachelet's chief of staff Rodrigo Penalillo. They pledge to provide a thorough and orderly hand over of information. Working level government contacts have told us that they have begun to compile briefing material for the incoming government, summarizing major programs and upcoming events. Bachelet has promised that she will govern until the very last day, March 11 - meaning both that her government will remain active and also that she has no intention of "co-governing" with Pinera. Pinera's Transition Team - The Fantastic Six -------------- -------------- ¶5. (U) Harvard-educated lawyer Rodrigo Hinzpeter, Pinera's campaign manager and right-hand man, has been appointed to lead the transition team. Hinzpeter is a close Pinera advisor and also served as campaign manager for his 2005 attempt at the presidency. Former Chilean Ambassador to India Alfonso Silva has been assigned to handle protocol for the inauguration ceremony. Other members of the "iron circle" transition team include: -- Cristian Larroulet (56),one of the "Chicago Boys" (University of Chicago-educated Chilean economists who shaped Pinochet's economic model),he served in several government positions SANTIAGO 00000033 002 OF 004 throughout the military government (1973-1990). After the return to democracy, Larroulet co-founded the conservative think tank Liberty and Development Institute (Libertad y Desarollo). Although he has no official political party affiliation, he is close to the conservative Independent Democratic Union (UDI) party, and worked on several presidential campaigns for UDI candidates. -- Ignacio Rivadeneira (34) has been close to Pinera since 1999 when he was recruited as campaign manager for Pinera's presidential bid that year. Former vice president of the RN, he was campaign manager for Pinera in the 2005 elections and speechwriter in the most recent campaign. Rivadeneira holds a law degree from the University of Chile and recently completed a Master's degree in public policy at Harvard University. -- Miguel Flores (47) is a long-time member of the UDI party, having served as its General Secretary (1989). Flores is director of the UDI's Jaime Guzman Foundation, whose flagship program recruits young professionals for public service in municipalities with UDI mayors. For the transition, he has been charged with the task of identifying young professionals to serve in the new government. Flores holds a law degree from the Catholic University of Chile. -- Maria Luisa Brahm (52),a lawyer and friend of Pinera's for the past 20 years, is the executive director of the RN's Freedom Institute think tank (Instituto Libertad). She helped Pinera develop his platform for the 2005 elections and, according to press reports, was the first to be called as an advisor for his recent campaign. -- Magdalena Pinera (34) is the oldest child of the president-elect. Considered to be the most "political" of his children, she was deeply involved in the presidential campaign, especially with technology and new media. Previously, she worked as a history teacher at one of Santiago's elite private schools. ¶6. (U) In an initial transition team meeting on January 20, Hinzpeter and Larroulet met with Perez Yoma to begin discussing details of the transition. Their next meeting, on February 8, will kick-off a series of bilateral meetings between outgoing ministers and ministers-designate. According to press reports, Pinera's team has requested Government Controller Ramiro Mendoza to instruct a public administration workshop for them at the end of February or first week of March. Pinera: Pre-Inauguration Priorities -------------- ¶7. (U) In line with promises made during his campaign, Pinera is scheduled to sell his 26% stake in LAN Airlines before his March 11 inauguration. Pinera has stated that the money earned from this sale (estimated at close to USD 1.5 billion) would be deposited into a newly created blind trust. Since Pinera's presidential victory, critics have focused on his delay in finalizing the LAN deal, citing transparency issues and a potential conflict of interest. ¶8. (U) Although Pinera won't announce his cabinet until the week of February 8, local press is already mentioning names of potential ministers. Pinera assures that the cabinet will include younger leaders and women, but he will not attempt cabinet-level gender parity initiated by Bachelet. Pinera has reportedly shown a fondness for the "Sarkozy model," which would allow the Concertacion to hold onto a few ministerial positions. Speculated names include Housing Minister Patricia Poblete, Ambassador to the UN Heraldo Munoz, and Foreign Minister Mariano Fernandez. The question is, will any of these Concertacionistas actually accept SANTIAGO 00000033 003 OF 004 his offer? To fill the over 1,000 sub-ministerial appointed positions, Pinera and his advisors have been feverishly reviewing the piles of resumes that were sent to conservative think tanks as well as directly reaching out to prospective appointees. Bachelet: Non-Stop Until March 11 -------------- ¶9. (U) Bachelet plans to maintain her busy travel schedule throughout the rest of her administration. Upcoming regional travel includes Guatemala, Mexico, Argentina, Uruguay, and Haiti. Bachelet and Pinera will attend the Rio Group meetings in Mexico, where Chile will assume the role of President Pro-tempore. Bachelet will also travel extensively throughout Chile over the next two months. While many Santiaguinos abandon the capital for the beach during much of February, Bachelet is likely to take just a few days of vacation. ¶10. (SBU) Chile needs to provide on March 9 its response to Peru's challenge to its maritime border in the International Court of Justice in the Hague. To ensure continuity, the Bachelet government had been exchanging information with advisors to the various presidential candidates before the election. The government is now reviewing its submission with foreign policy advisors in Pinera's transition team. ¶11. (U) By February 12, Bachelet must designate three new board members for state-owned copper company Codelco. Once in office, Pinera will have the option to change the three board members appointed by Bachelet. However, according to local press, Bachelet is likely to choose directors who are close to Pinera rather than Concertacionistas so that they will be able to serve on the board for longer than just a few months. ¶12. (U) Before leaving office, Bachelet is working non-stop to finalize emblematic projects and to get a few key pieces of legislation passed. Known as "the President of Social Protection," Bachelet is preparing a massive International Women's Day event for March 8 as well as a ribbon cutting ceremony for the 3,500th government-run day care center. Bicentennial projects include renovations to the national stadium and the first phase of construction for a major new cultural center. Bachelet is hoping that a proposed law, which would require the president of Chile and other high level government authorities to hand over the management of their investments to blind trusts, will be passed before her departure. However, considering the legislation still needs to be approved by the lower house before being presented to the Senate, and Congress is only in session for five working days before the inauguration, it is unlikely that the law will be passed under Bachelet's command. Other top priorities include the creation of a Public Security Ministry, a new Superintendent of Educational Quality, and reforms for the national prison system. ¶13. (U) The United States has factored into the Bachelet administration's efforts to wrap up ongoing projects before the end of her term. On January 12, the U.S. signed a new extradition treaty with Chile, and on February 4 the two countries will sign a double taxation treaty. In addition, the United States and Chile have identified joint development projects in other countries in the region, advancing an initiative that was launched when Bachelet visited Washington in June, 2009. Comment -------------- ¶14. (U) The exemplary courtesy and transparency that both presidential candidates and President Bachelet displayed during the SANTIAGO 00000033 004 OF 004 January 17 election has continued into the transition season. Although unaccustomed to transitioning national leadership from one political coalition to another, both sides are working hard to make the handover a success. End Comment. URBAN