Enriquez-Ominami Predicts Pinera Victory, Plans New

C O N F I D E N T I A L SANTIAGO 000007

SIPDIS

E.O. 12958: DECL: 2020/01/14
TAGS: PGOV ECON CI
SUBJECT: Enriquez-Ominami Predicts Pinera Victory, Plans New
Political Party

CLASSIFIED BY: Paul E. Simons, Ambassador, State, AMB; REASON: 1.4(B)


1. (C) Summary. Despite his electoral losses, former presidential
candidate Marco Enriquez-Ominami is interested in remaining engaged
in politics and hopes to form a new political coalition to include
his supporters and two smaller Concertacion parties, the Party for
Democracy (PPD) and the Radical Social Democrats (PRSD).
Enriquez-Ominami has "no doubt" that Pinera will win the
presidential election and issued a weak endorsement of former
President Frei on January 13. End Summary.




2. (C) During a January 4 meeting with the Ambassador, former
presidential candidate Marco Enriquez-Ominami said that he had "no
doubt" that opposition candidate Sebastian Pinera would win the
January 17 runoff presidential election, and noted Pinera's
continued excellent campaigning, including targeting voters who had
supported Enriquez-Ominami in the first round. Enriquez-Ominami
supporters tend to be urban and informed: Pinera knew he would
have to reach them quickly to win his votes and mobilized his
campaign to do so, while Frei was slow to begin courting them.
Pinera has also taken on board many of the themes that
Enriquez-Ominami promoted in his campaign, even taking the
controversial step of including a gay couple in his election
advertising.




3. (C) Enriquez-Ominami said that he was surprised that the leaders
of all four Concertacion parties had not resigned immediately after
Frei's poor performance in the December 13 first round election, as
many observers had expected. The leaders of the two smaller
parties--the Party for Democracy (PPD) and the Radical Social
Democrats (PRSD) both resigned on December 30, but Socialist Party
president Camilo Escalona has been particularly steadfast in his
refusal to resign, despite calls for him to do so.
Enriquez-Ominami asserted that President Bachelet, herself a
Socialist, is backing Escalona as party president because she knows
that Escalona would support her if she chooses to run for the
presidency in 2013.




4. (C) Enriquez-Ominami noted that President Bachelet has initiated
a big legislative push to get several progressive laws passed
quickly, including legislation that would nationalize water rights,
improve public education, counteract inflationary losses on public
pensions, and implement changes to voting law. Several of these
items are changes that Enriquez-Ominami favors, and he (and the
press) have been portraying this move as a conciliatory gesture
from Bachelet designed to get Enriquez-Ominami to endorse Frei.




5. (C) The former presidential candidate indicated that he plans to
form a new political party (as yet unnamed),hopefully together
with the two smaller Concertacion parties, the Party for Democracy
(PPD) and the Radical Social Democrats (PRSD). One of the party's
major initiatives will be to promote tax reform, lowering taxes on
individuals and raising them on corporations. Enriquez-Ominami
advisor Max Marambio, who was also present in the meeting, noted
that Chilean corporations are expert at finding loopholes in tax
law and, despite an ostensible 17% corporate tax rate (5% for
mining companies),in reality pay very little. Enriquez-Ominami
would favor raising the corporate tax rate to 30%, increasing taxes
on mining companies, lowering individual tax rates somewhat, and
using the additional revenue to fund social programs.




6. (U) On January 13, Enriquez-Ominami publicly backed Concertacion
candidate Frei, though in the weakest possible terms.
Enriquez-Ominami did not even mention Frei by name, and instead
emphasized Frei's poor showing in the first round, saying "I will
vote for the candidate who received 29 percent of the vote."




7. (C) COMMENT: Marco Enriquez-Ominami is not letting this year's
electoral defeat dampen his enthusiasm for Chilean politics. His


movement's showing on December 13 was disappointing: while
Enriquez-Ominami's failure to advance to the runoff election was
not a surprise, the defeat of all of his parliamentary
candidates--including some heavily favored incumbents--was a shock.
His supporters have scattered for now, with some endorsing Frei,
others backing Pinera, some discussing their plans to cast spoilt
or null ballots, and one former parliamentarian having renounced
politics altogether. Nonetheless, Enriquez-Ominami hopes to gather
his erstwhile followers and peel the Concertacion's two smaller
parties-- the Party for Democracy (PPD) and the Radical Social
Democrats (PRSD)--away from their current coalition and into his
orbit. It remains to be seen if his efforts will be successful
and, if it is, how three political coalitions could function in an
electoral system designed for two coalitions. End Comment.
SIMONS