US embassy cable - 05SANTIAGO1592

UNCLAS SECTION 01 OF 02 SANTIAGO 001592 
 
SIPDIS 
 
DEPT FOR WHA/BSC 
 
E.O. 12958: N/A 
TAGS: PGOV, EAID, PREL, PINR, CI 
SUBJECT: PRESIDENTIAL CANDIDATES' ECONOMIC ADVISORS OUTLINE 
GOALS 
 
REF: SANTIAGO 01574 
 
1. Summary: Economic advisors for the three leading 
presidential candidates outlined their respective candidates' 
positions on June 22 before 200-plus members of the Chilean 
and foreign business communities.  The three agreed the Lagos 
Administration had made significant achievements in the 
macroeconomic area, but offered differing views on how to 
address shortcomings and grow the Chilean economy over the 
next 10-15 years. 
 
2. Presidential front-runner Michelle Bachelet's advisor, 
Jorge Marshall, said increasing productivity and reducing 
poverty were the keys to achieving future growth.  He claimed 
only the governing Concertacion coalition possessed the 
capability to lead Chile to the next level.  Jose Ramon 
Valente, the advisor for Democratic Independent Union (UDI) 
candidate Joaquin Lavin, cautioned that Bachelet would follow 
her "true socialist feelings" -- and not the advice of her 
free-market advisors -- if elected.  Felipe Morande, advisor 
to National Renewal (RN) Party candidate Sebastian Pinera, 
argued that job creation was key to future growth and 
reducing poverty.  End summary. 
 
3. Economic advisors for the three leading presidential 
candidates presented their candidates, positions on Chile,s 
economic future to over 200 Chilean and foreign business 
representatives at a seminar sponsored by AMCHAM, El Mercurio 
and the Council of the Americas on June 22.  The three 
followed center-right National Renewal presidential candidate 
Sebastian Pinera, who delivered the opening address (reftel). 
 Below is a summary of the comments offered by each advisor, 
in order of appearance: 
 
--------------------------------- 
JORGE MARSHALL (MICHELLE BACHELET) 
--------------------------------- 
 
4. The ruling Concertacion coalition has a window of 
opportunity created by the achievements of the Lagos 
administration to lead Chile into the developed world.  Chile 
should focus its efforts in two areas: increasing 
productivity and reducing inequality.  Marshall identified 
four factors that influence productivity: macroeconomic 
conditions, microeconomic conditions, businesses, and 
workforce.  He noted Chile was performing well on the 
macroeconomic front, but needed to do more on the 
microeconomic front, such as provide greater access to 
credit, and enact more flexible labor regulations.  Marshall 
said the problem of inequality in Chile had as much to do 
with education and culture as with economics, and asserted 
Chile should make a greater effort to incorporate women into 
the workplace at all levels.  He closed by emphasizing that 
Concertacion had demonstrated over the past 15 years that it 
(as opposed to the opposition Alianza) was capable of 
creating the necessary governing conditions for Chile to 
succeed. 
 
---------------------------------- 
JOSE RAMON VALENTE (JOAQUIN LAVIN) 
---------------------------------- 
 
5. Valente said it was important to look beyond a candidate's 
general statements and promises regarding economic policy, 
and examine each one's "moral and political base."  He argued 
that Bachelet, as a socialist, would "follow her heart," and 
not the free-market policies advocated by her advisors like 
Jorge Marshall.  "There is a big difference between Bachelet, 
and the technical teams led by people like Marshall who 
advise her," he said.  Lavin, on the other hand, would focus 
on liberty, efficiency, and solidarity, and lead Chile out of 
poverty and inequality and toward democracy.  Valente claimed 
the GOC under Lavin would do more with less, as opposed to 
more with more ("inefficiency"), or less with more 
("immoral").  Using the metaphor of a bridge, Valente 
emphasized the importance of all socio-economic classes 
working together to create equality.  "Lavin is the only 
candidate who can bridge the gap among the classes," he said. 
 
--------------------------------- 
FELIPE MORANDE (SEBASTIAN PINERA) 
--------------------------------- 
 
6. Job creation is the key to growing the economy and 
reducing poverty.  Together with de-regulation and increased 
focus on education, job creation can help alleviate a number 
of problems within the Chilean economy.  On education, 
Morande argued for greater investment in training teachers, 
revamping the scholastic curriculum, and in evaluating 
teachers' performance over time.  He added that Chile needed 
to ensure greater access to credit for all economic classes. 
Morande took issue with Marshall's point that only 
Concertacion was capable of governing, noting that UDI and RN 
also possessed the necessary leadership and technical 
capacity to govern. 
 
--------- 
BIO NOTES 
--------- 
 
--Marshall: Marshall recently departed from the board of 
Chile's Central Bank, where he also served as vice president 
(1993-2003).  He served as Minister of the Economy (1992-93), 
and Under Secretary of the Ministry of Economy (1990-92). 
Marshall earned a doctorate in Economics from Harvard.  He is 
married and has three children. 
 
--Valente: He earned his undergraduate degree in commercial 
engineering from the University of Chile, and an MBA from 
University of Chicago. (During his remarks, Valente described 
himself as "one of the many Chicago boys advising Lavin.") 
He has been a partner in the consulting firm Econsult since 
1989, a firm which advises companies interested in doing 
business in Chile, and Central and South America.  He also 
worked as a professor of finance and microeconomics at 
University of Chile from 1989-93.  He is married with 
children. 
 
--Morande:  Morande is a professor of economics at University 
of Chile and former chief economist at Chile's Central Bank. 
He was a visiting fellow at Stanford (2001-02), and taught 
economics at the Georgetown University's study abroad program 
in Chile in the 1980s/early 1990s.  His brother Pablo runs 
one of Chile's well-known wineries, Morande.  He earned his 
undergraduate degree in economics from University of 
Minnesota in 1983. 
KELLY