US embassy cable - 05SANTIAGO1547

C O N F I D E N T I A L SECTION 01 OF 02 SANTIAGO 001547 
 
SIPDIS 
 
E.O. 12958: DECL: 05/17/2015 
TAGS: PGOV, EAID, PREL, CI 
SUBJECT: NATIONAL RENEWAL PRESIDENTIAL CANDIDATE PINERA 
OUTLINES BROAD THEMES OF ECONOMIC PLAN 
 
REF: SANTIAGO 1090 
 
Classified By: A/DCM Andrew Chritton.  Reasons:  1.4 (b and d). 
 
1. (U) Summary: National Renewal presidential candidate 
Sebastian Pinera claimed, before a largely receptive crowd in 
late June, that the administration that succeeds President 
Lagos must address deficiencies in economic growth, 
education, and health care in order for Chile to become a 
developed country.  While acknowledging the Lagos 
Administration's achievements in macroeconomic stability, 
Pinera said the administration's failures in other areas had 
prevented Chile from taking full advantage of largely 
positive global economic conditions.  End summary. 
 
2. (U) Center-right National Renewal presidential candidate 
Sebastian Pinera delivered the opening address at a seminar 
co-sponsored by AMCHAM and one of Chile's leading 
conservative dailies, "El Mercurio," on June 22.  The 
seminar, entitled "Economic Projects for the Future: Three 
Challenges," also featured presentations by economic advisors 
to Pinera and the other two principal presidential candidates 
(septel).  Approximately 200 Chilean and foreign business 
representatives attended the event, which received 
considerable press coverage. 
 
3. (U) Summary of the key points made by Pinera during his 
20-minute presentation: 
 
(A) Thrust: The Lagos Administration without question has 
achieved a number of economic accomplishments, particularly 
concerning macroeconomic stability.  However, there are 
several areas requiring immediate attention if Chile wants to 
grow and be competitive in the global economy. 
 
(B) Negatives: Pinera identified the following areas where 
the Lagos Administration had been deficient: 
 
--Growth Rate: Chile's growth rate over the past 2-3 years 
has not been enough to propel Chile to the next level.  The 
Lagos administration should have taken better advantage of 
the favorable economic conditions to grow the economy more. 
There are two main reasons why the Chilean economy has grown 
more slowly than it did during the last decade: declining 
investment (by both Chileans and foreigners), and declining 
productivity. 
--slow rate of job creation 
--increase in unemployment 
--declining rate of wage increases 
--increase in inequality of wealth 
--declining educational standards and quality 
--declining availability and quality of health care 
 
On these last two (education and health care), Pinera 
asserted that, despite large increases in spending, Chile 
ranked low in both areas, given its overall level of 
development.  Pinera characterized the Chilean education 
system as "broken."  He said it was incomprehensible that 
this system produced such large numbers of students who were 
not competitive in the global economy. 
 
(C) Solutions: Pinera (who at this point was running out of 
speaking time) rattled off the following steps for Chile to 
take to "complete the transition from the underdeveloped to 
the developed world:" 
 
--increase growth rate ("four percent will not suffice") 
--increase capital investment -- both from within Chile and 
from abroad 
--increase quality of education 
--increase flexibility in the economic sectors and the labor 
markets 
--reduce poverty 
--increase training of the workforce. 
 
(D) Conclusion: Pinera said Chile's future would depend on 
the efforts of Chileans, not on outsiders or some grand 
"imperial power."  "It is in our (Chilean) hands." 
 
4. (C) Comment: Pinera's remarks were filled with statistics 
and sophisticated economic terminology.  The forum and 
audience were tailor-made for him, and allowed him to show 
off his extensive formal academic training (Post Note: Pinera 
earned a doctorate in economics from Harvard and has 
considerable business experience. End Note.)  His criticism 
of the state of the Chilean education system, and his call 
for greater flexibility in the economic sectors and labor 
markets track with comments we have heard from other leading 
Chilean economists.  Pinera displayed the same degree of high 
energy that he has shown on the campaign trail since entering 
the presidential race in mid-May (reftel).  In the latest 
Center for Public Studies poll released July 14 Pinera polled 
14 percent, behind Alianza rival and Democratic Independent 
Union (UDI) presidential candidate Joaquin Lavin at 21 
percent, and Socialist Party candidate Michelle Bachelet at 
47 percent. 
YAMAUCHI