Chilean Political Stability: A 6-Month Outlook


    Since 2019, Chileans periodically take to the streets and protest against a myriad of government policies. Chileans recently elected Gabriel Boric by a slim majority but rejected his proposed constitutional amendments in a referendum in September. In the meanwhile, Chile’s economy is navigating a difficult road to recovery from the pandemic, further layering discontent in the country.

    KJ-1: There is a realistic probability that the Chilean government will enact constitutional reforms in the next 6 months.

    • President Boric proposed a constitutional referendum to solve the country’s rampant political polarization and social discontent [source].  
    • Lack of political experience and technical background among members of the Constituent Assembly contributed to an unpopular draft constitution [source].
    • Opposition lawmakers support a new draft and President Boric held several meetings in an effort to jumpstart the process [source].
    • Boric reorganized his cabinet after losing the vote in order to widen the scope of coalition participation [source].
    • Support for a new constitution ranks high among Chilean voters who dislike the current Pinochet era document [source].
    • The UN Human Rights Regional Office for South America is assisting the government in drafting the new document [source].
    • As part of the UNHRROSA’s assistance program, the UN hosts seminars and public hearings designed to facilitate greater stakeholder participation in the process [source]. 

    KJ-2: It is likely that the Chilean economy will perform poorly in the next 6 months.

    • Thus far, foreign direct investment in Chile has exceeded the 5-year average, however, the inward flow was down by 14% in the first half of the year [source]. 
    • Overall, it appears FDI is decreasing in the second half of 2022 [source]. 
    • The slowdown of FDI is linked to uncertainty surrounding the constitutional process [source]. 
    • The Chilean Central Bank forecasts an overall decrease in FDI of 3.3% in 2022 and 4.7% in 2023 [source]. 
    • The Chilean economy will grow slightly by the end of 2022 but is expected to contract by at most 1.5% in 2023 [source]. 
    • The government is attempting to mitigate the bleak situation with tax breaks for foreign businesses, particularly those involved in mining [source]. 
    • The price of industrial metals fell by 17%. Copper fell by  6% to $7,560 a tonne [source]. Chile is the world’s leading copper producer, averaging over 28% of global production [source]. 
    • The drop in the price of industrial metals coincided with a slowdown in manufacturing growth in China and persistently high global energy prices [source].
    • China registered lower GDP growth than the rest of Asia for the first time since 1990, impacting reliant economies such as Chile [source].

    KJ-3: It is likely that Chile will continue to experience widespread protests in the next 6 months.

    • The Piñera government cracked down on protesters in 2019, leading to widespread abuse by the security forces [source]. 
    • Chilean police fired rubber bullets into crowds, resulting in eye injuries. Eye bandages became a symbol of the protest movement [source].
    • The unrest in Chile resulted in the largest recorded instance of ocular trauma cases anywhere in the world [source]. 
    • Following the loss of the constitutional vote, students took to the streets and shut down several metro stations [source]. 
    • The students also demanded wide-reaching social reforms to address the rising levels of inequality in Chile as well as educational reforms [source]. 
    • The new constitution was meant to address land and water rights for Chilean citizens and to address the widespread abuse of Chile’s water supplies by agricultural firms [source]. 
    • The need for comprehensive environmental reforms became apparent as the two main rivers of the Petorca region dried up [source]. 
    • Lake Aculeo completely dried up in 2018 as a result of siphoning for water-intensive agricultural projects [source]. 
    • The situation has become so desperate that emergency water tankers deliver water supplies to communities across the country [source].
    • The run-up to the referendum was fraught with misinformation, such as the claim that the new constitution would ban bottled water, highlighting the central role water plays in the decision-making process for many in Chile [source]. 

    Intelligence Cut-Off Date 29 September

    Alec Smith
    Alec Smith
    Alec Smith is a graduate of the MSC International Relations program of the University of Aberdeen and holds an LLB in Global Law from Tilburg University. He works in the private sector in field investigations and security.

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