The Twilight of Chile’s Leftist Adventure

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We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

•The Twilight of Chile’s Leftist Adventure

•Milei’s Argentina: Lower Inflation, Higher Poverty

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•The Twilight of Chile’s Leftist Adventure
680 words | 3 minutes reading time

The failure of Chile’s constitutional reform was the final blow for President Gabriel Boric and those who led the 2019 protests, commonly known as the Estallido Social (“Social Outburst”). A bizarre situation has ensued: Boric managed to reach the presidency, yet the ideological hopes that propelled his political career have been dashed.

Panorama. Gabriel Boric, the youngest president in Chilean history, came to power with an ambitious and radical political project that promised to shake the country’s very foundations. His proposals amounted to a wholesale “refoundation” of the Chilean state. Boric, the great victor of the 2019 protests, routed conservative candidate José Antonio Kast in the 2020 presidential runoff. He entered La Moneda Palace with the single-minded goal of reforming “Pinochet’s Constitution.” His ambition was as great as his failure.

• He sought to declare Chile a plurinational state à la Bolivia; abolish the country’s private pensions and universities; guarantee universal housing; and limit legal protections against eminent domain.

• However, in September 2022, the new Chilean Constitution was rejected by more than 61% of voters.

• The defeat ended the entire political project of a president who still had three years left in office. Now, five years removed from the 2019 protests, the right-wing is likely to return to power.
  
  

Between the Lines. In light of the referendum, Boric’s government was forced to grow more centrist. This has left him in a sort of twilight zone. Moderates, not to mention conservatives, distrust him, deeming his failed Constitution too radical; the Chilean left, on the other hand, resents what it sees as Boric’s betrayal. Chileans, in sum, are at best apathetic towards their president, who will leave office in 2026 and is not eligible for immediate reelection.

• Chileans have taken a turn as extreme as Boric’s ambitions. Three years ago, they elected the youngest president in history, and now both presidential front runners are over 70 years old.

• The 2025 elections could mark a repeat of the 2013 elections, pitting Michelle Bachelet, a left-winger, against her childhood friend, Evelyn Matthei, a conservative. Bachelet won in 2013; in 2025, polls suggest Matthei would finally reach the presidency.

• Matthei, 70, is the current mayor of Providencia, an affluent suburb of Santiago. She will likely stand as the Independent Democratic Union’s (UDI, center-right) candidate, having wrested the right-wing’s mantle from Kast.
  
  

To Note. Matthei is Boric’s foil. Known for her conservative fashion tastes, her speeches emphasize the importance of law and order and a productive economy. Almost twice the age of the current president, Matthei is emerging as the most popular candidate; approximately 26% would vote for her in the first round, which implies a comfortable victory march in a runoff against Bachelet.

• Naturally, with more than a year until the elections, these polls are not representative, but the right is optimistic. UDI leader Guillermo Ramírez says that Matthei “beats everyone” despite not yet being an official candidate.

• Matthei’s comes at arch-conservative José Antonio Kast’s expense. Kast, a member of Chile’s Republican Party, was briefly the Chilean right’s undeniable leader, but his profile has suffered due to his party’s political clumsiness.  

• With this said, support for Matthei has dropped 3% since rumors of a Bachelet candidacy gained ground. Matthei nonetheless holds an advantage of more than 8% over the former president.
  
  

Balance. If this state of affairs persists, Bachelet and Matthei will face each other in the runoff, scheduled for December 2025. Right-wing candidates already have 43% of the vote, in contrast to left-wing candidates’ 25%. After what seemed like the awakening of a radical generation between 2019 and 2020, Chile appears to have rejected the left.

• Boric’s government shows that it is much more difficult to govern than to be in the opposition. His appeals to social justice have not convinced the electorate, which regards other issues as far more pressing.

• By November 2023, 51% of the population said that their greatest concern was security; only 6% said it is social justice. Opposition to illegal immigration from nations as distant as Venezuela and Haiti is another issue Matthei is keen to deploy to her advantage.

• Thus, it is likely that having tasted power, Chile’s left-wing millennials will be forced to retreat.
  
  

•Milei’s Argentina: Lower Inflation, Higher Poverty
578 words | 3 minutes reading time

Argentine President Javier Milei’s “fiscal adjustment” is yielding results, but the price to pay is beginning to translate into social unrest that could complicate his hold on power, as well as his performance at the 2025 Argentine midterms.

Panorama. In September, Argentina’s inflation rate came in at 3.5%, a record-low figure for Milei. It is the first time that monthly inflation has stood below 4% since 2021. The good news was accompanied by bad news in the form of the National Statistics Institute’s (INDEC) report on poverty.

• The INDEC report suggests that during the first half of 2024, 52.9% of Argentines were poor and 18.1% abjectly poor.

• These figures are much worse than those published in December 2023, when poverty stood at 41.2%. Thus, during Milei’s first six months in office, poverty increased by 12.8%.

• The INDEC measures poverty based on Argentines’ income and purchasing power. According to its models, an individual may be considered poor when their income is insufficient to cover basic expenses.
  
  

The Data. The INDEC’s report does not surprise Milei. The rise in poverty is a direct result of his famed “adjustment,” which necessarily involves the unraveling of an extensive network of government subsidies. Argentina’s libertarian president deems it a worthy sacrifice. For him, only austerity can solve Argentina’s perennial inflation problems.

• After taking office with a monthly inflation rate of 25.5%, Milei’s annual total for 2024 amounts to 74.1%. This represents a remarkable improvement compared to the inflation rate of 120.5% recorded during the previous government’s last year in office.

• Understandably, it is difficult for Argentines to digest the good news when, from January 2023 to date, prices have risen by 194.6%.
  
  

Yes, But. Since taking office, Milei has shuttered 13 ministries and fired around 30,000 public employees. This reduced almost 10% of the state’s payroll. In addition, he cut spending by 52% for education, 60% for social development, 28% for health care, and up to 68% for direct transfers to Argentina’s provinces, among many other cuts.

• High inflation, the elimination of subsidies, and widespread public sector layoffs explain the growth in poverty rates. This is part of the bitter pill that Milei predicted in December, when he laconically said, “There’s no money.”

• This has affected Milei’s popularity. For the first time since coming to power, his approval rating stands below 50%. From May 2024 to date, it has gone from 54% to 42%.

• These figures are still extraordinary in light of the country’s financial crisis, but it must be recalled that Milei has few members of Congress and little influence among provincial governors. Maintaining popular support is essential.
  
  

On the Radar. This does not change Milei’s plans. Deviating from the historical norm, he appeared before Congress to present his draft budget for 2025. In his speech, he announced that the central government had reached its austerity ceiling, meaning Argentina’s provinces will now have to countenance cuts of around $60 billion next year.

• Additionally, he announced that under his budgetary proposals, Argentina would end 2024 with a fiscal surplus. This is in addition to its substantial trade surplus, which now stands at $16.5 billion.

• Despite protests against him, Milei maintains that only fiscal probity and a balanced budget can “rescue” Argentina. According to his government, this would lead to GDP growth of 5% in 2025.

• With his popularity falling, Milei’s strategy relies on a relatively quick turnaround for reforms to yield results. His performance thus far has been remarkable, but in order to secure sufficient representation in Congress at the 2025 midterms, economic growth must come soon.