An outlook on Chile’s disappointing reforms and corruption scandals in 2015, and what to expect in 2016

2015 was not a good year for President Michelle Bachelet. Though she began her first term as president with an 84 percent approval rating, her rating slipped to 24 percent as of December 2015. In 2015 alone, the president saw a 20 point drop. As Bachelet seeks to turn things around, she will likely target two key issues of great concern to the country in the previous year: the administration’s failure to follow through with its promises of ambitious reform and the government’s struggle in dealing with corruption. 

Bachelet’s track record consists of many ambitious reform plans that have fallen through, one of which called for tax reform. The New Majority did pass tax reform in 2014, but the original plan was much more progressive than the implemented version. While the reform generates new revenue to finance education reform, it failed to affect income redistribution, as Bachelet had hoped. Her promise of aggressive tax reform represents one of her many proposals failing to generate bold changes. As a result, her reputation dampened, and the country’s skepticism surrounding her plans for ambitious reform has increased.

In addition to unfulfilled promises, the year was filled with a handful of corruption scandals, further diminishing constituents’ trust in the administration. The first corruption scandal revolved around her son, Sebastian Davalos, who used his political connections to get his wife preferential access to a ten million dollar loan with the help of Banco de Chile Vice President Andronico Luksic Craig. Davalos’ wife’s company, Exportadora y de Gestion Caval Limitada, used the money to buy plots of land in central Chile, later selling the land to make a profit. While Davalos resigned as head of a government charity in February 2015, the damage he caused to his mother’s reputation remains.

The second corruption case concerns high-profile political officials laundering money with the help of financial holding firm Penta and the chemical company Sociedad Quimica y Minera (SQM). The firms issued hundreds of fake invoices, evaded taxes, falsified statements, and illegally financed the electoral campaigns of several UDI candidates. For example, Jovino Novoa, a former official under Pinochet, was found guilty of tax fraud in November 2015, having channelled more than US$ 42,000 in campaign funds from Penta to former presidential candidate Pablo Longueira. Former Santiago Mayor Pablo Zalaquett issued false invoices to eight firms, including SQM, to finance his failed 2013 campaign for Senate. Senator Ivan Moreira and Congressman Felipe de Mussy are also accused of money laundering from Penta and SQM.

As we begin 2016, Bachelet may be turning a corner. To the surprise of many, she followed through on her education reform promise: the president’s proposal for free college education-- though initially declared unconstitutional-- was finally passed. The law will provide financial aid to over 200,000 students across the country, taking effect in 2016. The president also plans to rid public institutions of money laundering, stating a handful of anti-corruption measurements will be put into place this year. In her own words "I expect everything to improve. I'm not talking about my numbers in the opinion polls, but that the measures we are taking will bear fruit."

Though Bachelet has a long way to go to earn back the trust of her country, it seems as though she is taking steps in the right direction.