POLITICS
The week ends marked by the balances of the disturbances carried out after the commemoration, on Tuesday, October 18, of the third anniversary of the beginning of the social outbreak (95 arrests, 15 lootings, 150 events of alteration of public order and 24 police officers injured), in a context in which President Gabriel Boric vindicated the demands of 18-O and the ruling party ruled out apologies to Carabineros for tweets of past ministers that criticized the institution, which generated strong controversy in recent days.
- The milestone was a litmus test for the Government’s security coordination capacity, and in this context, this Thursday, the General Director of Carabineros, Ricardo Yáñez, together with the President of the Senate, Álvaro Elizalde, informed that «there was a considerable decrease compared to previous years» (last year there were 2 deaths and 68% more lootings), and defended the actions of Carabineros during the demonstrations and riots.
- Regarding President Gabriel Boric’s statements about sexual abuses carried out by the police during the outburst, Yáñez dissociated himself, commenting that «I have no knowledge about that, and if there are investigations, it will be the investigations that will determine such information».
- Yesterday also the national prosecutor (s) Juan Agustín Meléndez assured that there are 300 cases on this matter, but that so far only one has reached oral trial, in Arica, and another will be the oral trial on December 22 in Rancagua.
- In response to the criticisms made by the mayor of Recoleta, Daniel Jadue, who said that «nothing has changed» in the handling of the police and the government in the demonstrations, Yáñez indicated that «we have been working for almost three years together with the German police, we have established new working methods, new operational tactics to obviously reduce the possibility of people being affected in any way».
This week, President Gabriel Boric was the main speaker at the XVIII National Agro Meeting (Enagro), organized annually by the National Society of Agriculture (SNA), where the president of the union asked him for «a constitution elaborated with feet on the ground».
- The audience of around 450 people anxiously awaited the signals that the President would send to the sector, mainly in relation to the progress of trade agreements – including TPP11 -, security issues and sectorial matters such as water.
- In this context, Boric ratified his willingness to sign this year the modernization of the agreement with the European Union, «which will allow lowering the tariffs of almost the total of Chilean exports made to the community».
- Regarding the TPP11, he said that he will respect the will of Congress, but did not commit deadlines, describing again that the Government has «sustained some concerns regarding the dispute settlement mechanisms, in line with what is being raised in the debate in the world, particularly in the European Union (…) My role as president is to safeguard the interests of Chile and that is what we are doing with the strategy we have developed», referring to the side letters sent to all the partners of the bloc.
- One element where the SNA agreed with Boric was the support for a bill by Senator Isabel Allende, which seeks to prioritize the loading and unloading of perishable products and foodstuffs at ports.
President Boric also spoke of his eventual visit to the Araucanía Region, commenting that in the coming weeks he will visit the area, and mentioned that it is part of his deployment around the country, where he has yet to visit the regions of Aysén and Tarapacá.
- «We recently changed our delegate, precisely to give a new impetus to the zone, and we are working together with the private sector, also with the police and armed forces, to be able to guarantee security in the zone», he emphasized.
- He also announced the start of a new plan to safeguard the development of productive activities throughout the country: «We are going to generate a security plan for strategic food zones, which seeks to ensure the planting and harvesting of crops to supply food to the population».
- To this end, he instructed the presidential delegates to convene, as of next week, territorial round tables that will define this strategy, with the participation of the Ministry of Agriculture, seremis, the Public Prosecutor’s Office, the Police, the PDI and union leaders, among others.
- Among other aspects mentioned in his speech, Boric announced a plan to build smaller dams, after having been criticized for the scant progress made in recent years in announcing large dams, mainly in the areas with the greatest drought.
In politics as well, the Ministry of the Interior and Public Security informed this Thursday that the Government accepted the resignation of the presidential delegate of the Atacama Region, Gerardo Tapia. Thus, the current provincial delegate of Chañaral, Jorge Fernández, will take over as subrogate.
- Tapia’s departure follows a complaint filed against his chief of staff, Cristian Jara, for an alleged case of sexual abuse committed against a woman in his own work.
- Along with this, the delegate himself was denounced before the Comptroller’s Office for apparently not taking action in this case.
On Thursday, the Secretary of the Interior, Carolina Tohá, met with the United States Ambassador to Chile, Bernadette Meehan, where they discussed various integration issues between the two countries, such as the continuity of the Visa Waiver, which allows entry to the North American nation without the need to obtain a visa.
- Although Meehan revealed the intention of the U.S. to maintain Chile among the countries that can access this benefit and highlighted that «we have received excellent cooperation», she warned of the need to improve controls due to the fact that some people take advantage of the Visa Waiver to commit crimes in the North American country.
- «We continue to make progress and I am confident that we will be able to meet all the goals in the metrics we agreed to continue advancing» in the review process to establish the continuity of the benefit (the Government has been working on the issue for several months).
During this day, Raúl Soto (PPD) is expected to present his resignation to the presidency of the House, as established in the administrative pact (ruling party plus the Christian Democracy and the People’s Party) of March 10, so that next week will be crucial for the parties to start defining the position.
- The opposition (Chile Vamos and Republican Party), does not rule out approaches with the People’s Party (PDG) and the dissidents of the administrative agreement who do not want to vote for the communist Karol Cariola, in view of the drop of support she suffered during this week after being at first the candidate with more advantage to preside the House of Representatives.
- The withdrawal of support came after the political support and declarations of the PC in favor of the lawsuit against Sergio Micco, former director of the INDH, while Kariola called to «keep the word» in the face of the administrative agreement that would lead her to the presidency of the House.
- Meanwhile, in order to achieve the 78 votes required by the opposition, agreements must be reached, because between the Republican opposition bench, the Independent Democratic Union (UDI), National Renewal (RN) and Evópoli, they add up to only 65 votes.
The Senate Constitution Committee, chaired by DC’s Matías Walker, unanimously approved this week a constitutional reform to establish compulsory voting for all elections, except primaries.
- The proposal goes to the floor of the Upper House, which should happen next week, and then it must be seen by the deputies in the third step. I
- n any case, the modality of automatic registration is maintained.
Also related to Senator Matias Walker, this week he notified his party, the Christian Democracy, that he will resign from it together with the also DC Senator (for the Maule Region), Ximena Rincón, which would be effective before the national meeting of the party, next November 12.
- Walker has argued that he is in favor of «capitalizing the Rejection» (option strongly defended together with Rincón) and not to let «loose» those voters as soon as possible, considering that a wide majority of the citizenship supported such option in the plebiscite of September 4 and that «the current directive of the party -headed on an interim basis by Aldo Mardones- does not interpret that segment of the population».
- Otherwise, Walker and Mardones have had a series of frictions in the last weeks. One of them through social networks, in which they rebuked each other as a result of the lawsuit against the former director of the INDH, Sergio Micco.
- Together with discarding in the last week to join Amarillos x Chile (new political movement in order to their positions and emerged in the constituent process), Rincón and Walker notified that inside the DC and the Radical Party that was for the Rejection they plan to launch a new party, which would be headed by both senators and that could be announced in the next days.
The Salitre 2022 exercise continued this week in the Antofagasta Region.
- With the participation of 37 fighter jets from Brazil, Argentina and Chile, in addition to personnel from the United States Space Force and observers from Canada, Mexico, Peru and Uruguay, the maneuvers seek to train the capabilities of these countries to interact in an international coalition that must intervene, mandated by the United Nations, in an eventual armed conflict in the regions of Tarapacá and Antofagasta.
- In this context, a controversy arose after the Undersecretary for the Armed Forces, Galo Eidelstein (PC), made a request to the Armed Forces to inform about the study plans, teachers’ curricula and bibliography of their training centers.
- Eidelstein later clarified that the request is only for the integration of women and human rights, and confirmed that on Tuesday he will attend the House Defense Committee to answer the questions of the deputies on the controversy.
- However, last week, the corps of retired generals and admirals stated that there is a political intention in their request and that the Organic Law of the Armed Forces gives them autonomy to design and carry out their study plans.
A police milestone that will continue to be investigated and commented on during the next few days is the explosive device that was found this Thursday in a building in Santiago, in Las Condes district, where the offices of the Angelini Group operate.
- The device did not detonate, and the characteristics of the bomb are being studied.
- The Undersecretary of the Interior, Manuel Monsalve, defended the police intelligence work for the explosive: «It is not that there is a lack of knowledge of what is happening».
- He also pointed out that it is key to have a new national intelligence system, for which he said that between October and November indications will be sent to Congress.
CONSTITUTIONAL CONVENTION
While waiting for the official meeting for a constitutional agreement to be held on Monday and in the midst of the knots on the mechanism that these days prevent the ruling party and the opposition from advancing in the agreement, during the week the idea of an entrance Plebiscite resurfaced. Although in general this alternative does not convince the political parties of the ruling and opposition parties, it is revived from time to time by some actor.
- Although the People’s Party (PDG) is the only party that proposed it this week, other actors have revived the alternative.
- The presidents of the Congress say that the option is not discarded and that it is still on the table, which would imply having two ballots again and where the Chileans would be asked: «Do you want a new Constitution» and secondly, they will be consulted about the mechanisms, giving as options, a mixed Commission, between the Congress and a committee of experts, and a Constitutional Convention.
- However, both the ruling party and the opposition have acknowledged that this could only entangle the process and even delay it beyond 2023, also criticizing the uncertainty it generates and the cost of an eventual new process.
Monday’s meeting, initially scheduled for Thursday, was postponed in order to coordinate the agendas of various actors and to ensure that the dialogues between the parties prosper.
- «Every day the positions have been getting closer, the issue of the so-called institutional bases of the constituent process has been almost completely resolved, the positions of the different actors regarding the mechanisms have been made explicit and the bilateral and multilateral dialogues have allowed to bring the points of view closer», said the president of the Senate.
- «We believe that on Monday there will be conditions to take an additional step in the challenge ahead of us to reach a good agreement for Chile», although he stressed that «we must be prudent and responsible».
- In addition to defining the mechanism, the week’s talks also addressed the figure of the «arbitrator» who will ensure compliance with the constitutional bases, for which it has been proposed that the Congress itself will fulfill this function.
ECONOMY
The week started with the data released by the World Bank (WB) for Chile, amid high inflation and the end of liquidity (after the end of resources from AFP’s withdrawals and State aid), the organization forecasts that poverty in Chile will reach 10.5% in 2022 (surpassing the 10.2% recorded in 2015).
- The WB estimates that in 2021 this indicator reached an unprecedented and transitory 2.1%.
- According to data from the entity, from 2006 onwards, poverty had a constant fall in the country, going from 29.9% during that year to 7.5% during 2017, marking a slight rise in 2020 when it reached 8%.
- However, they warn that the current level will continue in 2023, without returning to the situation before the pandemic.
In economy as well, next Monday will begin the vote in particular of the articles of the tax reform in the Finance Committee of the House, a project to which the Government has put extreme urgency to accelerate its processing, that is to say, it has fifteen days to be dispatched by the respective Corporation.
- On the other hand, the Secretary of Treasury, Mario Marcel, presented this week a second set of indications that include observations made to the bill, and also, this Wednesday expired the deadline set in the instance for the parliamentarians to introduce amendments.
- Despite the fact that the legislators do not have a law initiative on tax matters, the idea is to negotiate with the Executive the proposed changes during the remaining processing.
- The opposition, meanwhile, commented during the week that they are available to talk and move forward, «but only if the Government withdraws some elements that are negative for savings, investment and the generation of new enterprises and new jobs».
- One of the issues that has generated most debate within the framework of the tax reform is the presentation of an indication by pro-government deputies that creates a new tax on financial operations, known as the ‘Robin Hood tax’. Regarding this issue, Marcel warned this week about an eventual double taxation and suggested modifications.
Meanwhile, this week the government and business associations began an agenda to increase productivity in Chile, after the first meeting with the Confederation of Production and Commerce (CPC), and in the next few days meetings will be held with associations of smaller companies and with the Central Unitary Workers’ Union (CUT).
- In this way, the government began its work to prepare the Productivity Agenda that it has promised to send soon, which will include «regulatory and administrative measures and legal reforms in the necessary topics».
- The Executive also highlighted that the agenda presented is grouped in several axes, among others: improving the country’s international competitiveness; improving the conditions for the most productive MSMEs and the processes to develop new investments; advancing in the processing of bills and regulations to eliminate obstacles that affect competition and productivity; improving the management of primary health care; addressing the research deficit, and tackling the informality of companies and individuals.
The National Confederation of Freight Transport of Chile (CNTC) described as «another black Thursday for transport» the new increase in the value of diesel that was applied yesterday, where the fuel increased by $10.8 pesos per liter.
- Price, which according to the CNTC, is only referential, since in many parts of the country, especially in the extreme zones, this increase is higher, to the point that the value of diesel currently exceeds $1,200 pesos per liter.
- The CNTC said that the sector is in a «state of alert» waiting for the government to react in the next few days and offer alternatives to face this complex scenario, or else they announced «more drastic» measures to avoid the collapse of the industry.
Another milestone in economic matters that marked the week was the presentation by the Undersecretary of Finance, Claudia Sanhueza, at the seventh version of the business meeting of the O’Higgins Region, Eneo 2022, where she presented the main measures promoted by the government to advance in decentralization.
- The authority mainly highlighted the benefits that the approval and application of the mining royalty will bring, a bill currently under discussion in the Senate Mining Committee and which will continue to advance next week (with the presentation of the different sectors and related experts).
- «In total, the royalty will imply greater resources for the regions of US$350 million, increasing the income of the regional governments by 24%. In per capita terms, mining regions will receive an increase of US$23,000 per year, while non-mining regions will receive an increase of US$13,000 per year», the Undersecretary specified.
- She also explained that the initiative contemplates the creation of the Regional Fund for Productivity and Development, whose resources will be allocated to the Regional Governments for investments with a productive impact (promoting investment, innovation and development projects).
- Despite the government’s defense of the bill, this week a study by the Center for Public Studies (CEP) warned that for companies with production of more than 200,000 tons of copper, the effective tax burden, if the royalty bill is approved, would vary between 47% and 74%, depending on the price of the mineral (mainly as an effect of the charge on sales).
Also in mining, Argentina, Bolivia and Chile are preparing a document to promote an «OPEC of the lithium triangle», in order to reach a «price agreement» in view of the volatility of the mineral’s value and to coordinate production flows, of which all three have large reserves and production potential, as reported this week.
- The price of the mineral is «arbitrary,» the sources said, due to frequent fluctuations in its value – which had already climbed to US$9,720 by the end of May 2021 per ton and is currently around US$73,000 – generating volatility and uncertainty.
- The foreign ministers consider that, if Argentina, Chile and Bolivia agree, then Australia – the world’s leading producer – could «come together» with the idea of «converging on the price».
- Argentina, Bolivia and Chile make up the so-called «lithium triangle», which has about 65 % of the world’s resources of the mineral and reached 29.5 % of total world production by 2020, according to the Argentine Mining Secretariat.
Undersecretary Sanhueza also stated that the Government has made an important effort in the design of the 2023 Budget to support the regions, not only in terms of resources, but also in flexibility for spending. «The draft Budget Law 2023, considers $1,500,620 million for the investment budgets of regional governments», she said.
- Also that a Regional Productivity Fund was established that contemplates an allocation of Ch$1,266 million.
- In addition, the amount allocated to the investment of the GORES is increased by Ch$39,973 million, representing a growth of 2.9% with respect to the expenditure in 2022.
- Another measure that the Undersecretary highlighted is the Sustainable Productive Development program, «which will be financed with part of the extraordinary income that Corfo is receiving from lithium. Natural resource revenues will be used to promote sustainable productive development in Chile».
- This new program amounts to Ch$155,280 million, which will be allocated to research and development, the promotion of new economic activities, innovation and entrepreneurship.
- Sanhueza added that «the Government of President Boric has set as a challenge to advance in a regional revenue bill that responds to three guiding principles: to advance in regional financial autonomy, to deepen and improve regional equity mechanisms and to improve sub-national fiscal institutionality».
Yesterday, the Undersecretary of Social Security, Christian Larraín, met with experts to discuss the proposal to be made regarding the pension reform, which is expected to be presented the first week of November.
- This was the first meeting to include right-wing economists – in previous meetings, the guests were of similar or left-wing sensibilities – including those who participated in the programmatic designs of the former right-wing presidential candidate, José Antonio Kast, in pension matters.
- The main questions point to the separation of the industry and whether the 6% pay-as-you-go system with the universal PGU is necessary, and with respect to the projected economies of scale that the government estimates would be produced by centralizing in a public entity the collection, sale, payment and collection management, among other functions, which are currently carried out by the AFPs, estimated at around US$ 500 million per year and which it is sought to transfer to commissions.
- The Executive mentioned that in the transition process, given that the Social Security Institute (IPS), which would be in charge of the administration of the accounts, does not currently have the required institutional framework, in a first stage this management will be put out to tender among those who know the system, i.e., the AFPs themselves.
This Thursday, the Santiago Chamber of Commerce (CCS) held the VII Version of the eCommerce Innovation Summit.
- During the event, George Lever, Research Manager of the guild, predicted that online sales will reach US$ 11 billion this year, with a drop of 8% in relation to 2021, due to the decrease in household income and consumption, high inflationary levels and interest rates, and the very high base of comparison that represents the year 2021.
- It would be the first time in history that online retail sales would post a contraction.
- Next year, however, they are projected to reach close to US$ 12 billion, with an advance of 5%.
Due to the debt accumulated by the isapres with various health care providers, this week several clinics throughout the country decided to suspend their agreements. This means that, since the contract between an isapre and the health care facility is no longer in force, each patient has to make the payment in full directly to the health center and then manage the reimbursement with their respective isapre.
- This situation raised a series of complaints to the Superintendency of Health in the last few days, so the agency, through its Funds Intendancy, issued this Thursday Circular N°413, which updates the regulations to protect the affiliated people and safeguard the access to the health benefits that are agreed in their isapre plans.
- The document, among other things, establishes the obligation of the isapres to grant financing via reimbursement in the event that the provider does not charge according to the agreement or that the agreement has ceased.
Regarding the dollar exchange rate, this Thursday it closed with a slight decrease, cutting the streak of four consecutive sessions of increases that it had shown and that encouraged concern in the markets due to the renewed threat of reaching $1,000 pesos.
- Thus, the price of the dollar ended its most liquid operations with a minimum drop of $0.60, at points of $978.30 selling pesos and $978.00 buying pesos.
- Another reason for the drop in the exchange rate is given by the rise in copper, as the red metal traded positive today, supported mainly by the news of China’s easing of its 0 covid policy.
The Luksic group’s firm will not be able to compete in the port business for three years.
- The general manager of SAAM, Macario Valdés, informed this week that the sale of SAAM Ports and SAAM Logistics in US$1,000 million to Hapag-Lloyd, implies the fulfillment of a series of clauses, among which stands out one in which the company, controlled by the Luksic group, is unable to compete in the port business in a maximum term of 36 months.
- The operation will leave the company controlled by the Luksic group with the tugboat business, where it is currently the third largest player worldwide.
- The applicable law of the agreement is based in New York, United States.
- By 2020, the company aims to double the size of the business in five years, generating economies of scale and diversifying its services.
- He also noted that during the next week they will present the request for approval of the agreement to the National Economic Prosecutor’s Office (FNE), adding that he estimates that the closing of the process ‘could take between six and nine months,