Chile: The Boric Government resigns itself to its parliamentarians and presents its own project to withdraw pension savings | International

Chilean President Gabriel Boric takes a photo with a group of supporters in Santiago, on April 7, 2022.
Chilean President Gabriel Boric takes a photo with a group of supporters in Santiago, on April 7, 2022.ALEX IBANEZ (AFP)

A month and a day after the inauguration of President Gabriel Boric, his government has faced a complex day in Congress on Tuesday. Just before a commission of Deputies began to vote for a new withdrawal of 10% of savings for pensions, to which the Executive refused due to its negative impact on the economy, La Moneda submitted to Parliament an alternative project that allows these funds, but with conditions. It is a gesture of political realism, although, at the same time, an example of the difficulties it has in ordering its own political forces, which in the previous days did not square with the guidelines of La Moneda and were –in large part– by approve the project.

The intention of Boric and his ministers is to put borders on this new withdrawal and, unlike what has happened in the previous three –some 43,000 million dollars have already been withdrawn from the private pension system since July 2020– , is intended for specific purposes such as the payment of alimony debts, health institutions, mortgages, basic services, financial or to advance in the purchase of a first home through the state system. It may not be less than about $1,380 or more than about $5,900.

The Minister of Finance, the socialist Mario Marcel, a symbol of fiscal responsibility, explained that the Government’s proposal being studied in Parliament represents no more than 20% of what a massive and unconditional withdrawal would have required. The economist said that since they are resources that would not be used for consumption, as on previous occasions, Chile would not have “demand pressure or effects on interest rates,” which are at their highest level since 2009, 7%.

It is a difficult moment for a government that, since coming to power, had organized itself around Marcel’s position, who, from the time of president of the Central Bank – a position he held until last January – warned about the negative consequences of these withdrawals for the economy. But it was a speech that, politically, was complex to sustain. In the Government of Sebastián Piñera, when the left was in opposition, the current ruling party pushed the withdrawals of pension savings three times, as did the right. President Boric did it as a deputy, as did two of La Moneda’s main political ministers, Camila Vallejo and Giorgio Jackson, despite the fact that they have dedicated themselves to explaining that conditions are not the same as the worst moments of the pandemic.

For deputies from practically all sectors, including those from Boric’s forces, it was almost impossible to reject a popular initiative backed by 66.5% of the citizenry, according to the Pulso Ciudadano survey from a week ago.

The strategy of the Boric government is aimed not only at avoiding a collapse in the economy, which would make the president’s transformative agenda more difficult, but also at not causing a political wound to Marcel and another of his most important ministers, Jackson, who has in their hands the relationship with Parliament. If the project for the new unlimited withdrawal of pension funds is approved, it would be a serious setback for both and for the Government itself, just one month after assuming power on March 11. This scenario, however, does not seem likely, given that the ruling party has squared itself around the official initiative announced on Tuesday.

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“When voting, let’s think about what is good for the country in the long term,” said the president, in an appeal to the deputies who are already studying the initiative. The communist deputy Karol Cariola, meanwhile, reported that the deputies of her party will approve the government’s proposal “because it is aimed at those who need it most.” The same would be repeated in the rest of the ruling party, although in the Chilean Congress nothing is taken for granted.

What has happened in Chile shows how complex it will be for Boric to order his own forces in Congress, where he does not have a majority in either the Chamber of Deputies or the Senate. He is a president supported by two coalitions – one made up of the Communist Party and the Broad Front and the other by the Socialist Party and other forces that made up the center-left Coalition – but where the political parties finally do not have the power of yesteryear with respect to of their leaders.

Boric’s move has raised criticism from different sectors. While the opposition spoke of a “lying and focused” project, political analysts, such as Max Colodro, have highlighted the inconsistencies: “A government progressive allows the highest income sectors to withdraw pension funds to pay off business debts without paying taxes. From an anthology”, he wrote in reference to the fact that the most needy people no longer have pension savings. But the darts have come from the left itself. For the communist mayor Daniel Jadue, who has not hidden this month his differences with La Moneda, “the withdrawal project for specific purposes seems more like a rescue of the financial sector than of citizen needs. Price increases are not necessarily the result of withdrawals, but pure speculation. You have to listen to the people! ”, He wrote this Tuesday.

The rejection has also been technical. For the economist David Bravo, who led a commission on pensions in the second government of Michelle Bachelet – similar to the one that Marcel himself headed in the first term of the socialist – the government’s project is “unfortunate”. “Instead of trying to close a door that should never have been opened, a project is sent that opens an official door. The victim: pensions and social security”, assured the academic from the Catholic University.

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