Chile – Major Cabinet Reshuffle

Nearly two weeks ago, the President of Chile, Michelle Bachelet, during an interview with Canal 13, announced somewhat unexpectedly that she had asked her entire 23 member cabinet to resign. Stating that now was “the moment to change the cabinet”, President Bachelet then said that she would consider the position of her former ministers over a 72-hour period.

Those 72 hours are now up and President Bachelet has presented her new cabinet in what amounts to the most significant cabinet reshuffle ever witnessed in contemporary Chile. Five ministers have been completely removed from the cabinet, while four others have received new portfolios. Interpreted as a shift to the centre within the centre-left Concertación, Rodrigo Valdés, an economist trained at MIT, replaced Alberto Arenas as Finance Minister. This is the first time that a sitting Finance Minister has been removed by a Chilean President mid-term since Chile’s return to democracy in 1990.

Jorge Burgos, formerly Defence Minister, replaced Rodrigo Peñailillo as the Minister of the Interior while Alvaro Elizalde, formerly the chief government spokesperson, was replaced by Marcelo Díaz, formerly ambassador to Argentina. In addition, President Bachelet announced new ministers for Defence, Labour, Culture and Social Development. Some key portfolios remained undisturbed: Heraldo Muñoz will continue as Foreign Minister and Nicolás Eyzaguirre, key to the President’s wide-ranging education reforms, will stay as Education Minister.

The cabinet reshuffle can primarily be understood in the context of Michelle Bachelet’s dwindling popularity. Her approval ratings have reaching the nadir of the low thirties, a far cry from the eighty plus rating that she enjoyed towards the end of her first term in office. In turn, this poor support for her administration is largely a product of a number of corruption scandals that have recently engulfed the Chilean body politic, leaving the Chilean electorate generally dissatisfied and unhappy with the political elite and the institutions of the state.

The first of these corruption scandals involves one of Chile’s largest corporate entities, Penta Group, which was allegedly receiving false invoices from politicians in order to allow the company channel illegal campaign donations to political parties, mainly the right-leaning Unión Demócrata Independiente (UDI). A number of Penta executives were jailed, but have since been released and placed under house arrest.

More significantly however, one of the scandals involves the President’s own son, Sebastián Dávalos. Dávalos has been accused of using his political influence to arrange a US$10 million bank loan for his wife’s firm, Caval, which then used the funds to purchase land in central Chile that was promptly resold for a profit. Although the national banking regulator has cleared Dávalos of any wrongdoing, Congress has launched an investigative committee to explore the allegations.

For a previously enormously popular president, who was partly elected due to her harsh critique of staid and corrupt practices among the country’s political elite, these scandals have been disastrous for her administration. President Bachelet denies any wrongdoing, or knowledge of the loan her son received, but the scandals have nonetheless left their mark. The cabinet reshuffle is clearly an attempt to inject new life and untarnished political blood into her damaged administration. We will just have to wait and see if it works.

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