Cablegate: Bachelet's State of the Union: Education Again

P 232053Z MAY 08


E.O. 12958: N/A

1. (SBU) Summary: President Bachelet gave her third State of the
Union address and announced increased social spending of USD 222
million. Highlights of her lengthy address include announcements on
education, science and technology, labor, political and electoral
reform, and Chile's international standing and foreign policy.
While discussing energy, Bachelet said that she will meet with
alternative energy experts and visit a solar power plant on her
upcoming visit to the U.S. She also mentioned by name the
Chile-California partnership and the Equal Opportunities Scholarship
Program. She called on Chile to adopt a more active role in
promoting international agreements and solutions to world
challenges. The big question remaining is whether or not she can
push through key pieces of her agenda before upcoming municipal
elections in October. End Summary.

2. (U) President Bachelet gave her third State of the Union address
to the Chilean Congress on May 21. Members of her cabinet, the
diplomatic corps (including the Charge d'Affaires a.i.) and other
prominent Chileans were in attendance. As in previous years, she
announced increased social spending (though the USD 222 million is
far less than last year) in the areas of education, health, and on a
new subsidy for pensioners, among others, in order to "deepen" her
administration's focus on creating a social safety net for all

Education, Innovation, and Chile's International Standing
-------------------------- ------------------------------

3. (U) Bachelet's address reviewed achievements of her
administration -- pension system reform among them -- and presented
her focus for 2008. Highlights of her nearly two-and-a-half hour
speech include:

-- Education: Bachelet presented 2008 as the year of education
accords. She announced measures including 1000 scholarships for
university students to study abroad in 2008 (with 2,500 projected
for 2009 and 6,500 by 2012), additional new scholarships for
language training and for students with technical degrees, personal
computers for the best underprivileged elementary school students,
free university entrance exams for the poorest students, and mobile
computer labs for Chile's municipal schools. Educational policy
reforms are also in the works, including a plan for improving
teacher training.

-- Science and Technology: Bachelet announced a program to bring
foreign experts to teach at Chilean universities, especially in the
regions, and new investments to diversify aquaculture, acquire
scientific equipment in priority areas, and bring 35 new
municipalities online.

-- Labor: Bachelet announced measures to strengthen collective
bargaining, including the creation of a National Labor Union School
and promotion of an end to the restriction keeping union leaders
from running for congressional seats. (Her announcement comes as
Chile's percentage of unionized workers is at its lowest since 1990
and on the heels of major protests by sub-contracted mining workers
that shut-down some of Chile's state-owned copper mining operations
for days.)

-- Political and Electoral Reform: Bachelet made a forceful call
for the right to vote for Chileans living abroad, an end to Chile's
binomial electoral system, and popular election of regional
authorities (currently designated by the President). She also
stated her support for voluntary voting now that Congress recently
approved an automatic registration measure and announced a bill to
reform political parties.

-- International Standing and Foreign Policy: The President
announced budget increases of up to USD 25 million for this year and
USD 40 million for 2009 for promoting Chile's "country image"
abroad. Bachelet also announced a "new phase" for Chile's foreign
policy and a plan to "modernize" the Foreign Ministry -- including a
complete reorganization - that will be presented in 90 days.

Ties with the U.S. and a "New Phase" for Foreign Policy
----------------------- -------------------------------

4. (U) Bachelet mentioned the U.S.-Chile bilateral relationship
explicitly during her announcement of more scholarships: "All of
this we will do by cooperating closely with some of the world's
greatest powers in the area of education and knowledge. For this we
are working on a new Chile-California plan and we have already
launched the Equal Opportunities Scholarships with the United
States." She also mentioned plans to build similar programs with

the UK, Canada, Australia, New Zealand and other countries.

5. (U) In her discussion of Chile's energy needs Bachelet mentioned
renewable energy and said that she will meet with alternative energy
experts and visit a solar power plant on her upcoming visit to the
U.S. She announced efficiency measures, mentioned Chile's efforts
to use and produce biofuels, and ended with a clear statement in
favor of hydro-electricity (currently at the center of a hot dispute
between environmental groups and energy companies with concessions
to build large dams in the Aysen region). She made no mention of
nuclear power.

6. (U) In Bachelet's call for a "new phase" in Chile's foreign
policy, she first affirmed that Chile's "Wager on political and
economic insertion that began in 1990 has without a doubt been the
right one." She then stated that Chile must continue to insert
itself in a globalized world by actively participating in the
generation of international agreements that can meet "new
challenges" like: those presented by a complex international economy
and its multilateral financial institutions; climate change; the
food crisis; international peace and security; and the need for more
effective and democratic international institutions. Bachelet also
called for regional integration, mentioning neighbors Peru, Bolivia
and Argentina and the importance of increasing links with Asia
Pacific, which she called "Latin America's new frontier."


7. (U) Unsurprisingly, reactions from Concertacion members were
mainly positive, while the Alianza opposition criticized the address
as lacking in substance regarding the economy, energy and
agriculture, and for being "all talk and no action." A widely
expected announcement exempting pensioners from the required seven
percent withholding for the public health fund did not materialize,
and its absence generated vociferous criticism across the political
spectrum and overshadowed the announcements that were made. One
leading opinion-maker cited this bungled opportunity as yet another
"home-goal" of the Bachelet administration.

8. (U) According to press reports, Christian Democrats (DC) were
particularly displeased with the limitations placed on public
spending -- attributed to the fiscal strictness of Finance Minister
Andres Velasco -- and that DC proposals were not included. One
deputy commented to the press that, "even though we have DC
ministers, it seems as though our party isn't even in government."

9. (SBU) Comment: Bachelet's 2 hour-plus speech contained few
surprises and focused largely on social issues. That said, her
frontal emphasis on a few contentious domestic policy points --
electoral reform and emergency contraception -- gives the initial
impression she may go on the offensive in her final two years.
Seventy-five percent of the public surveyed felt her speech was
"better than expected." However, her glossing over of several of
Chile's serious challenges -- slowing economic growth, inflation,
the energy crisis -- make it look like her administration is
ignoring the elephant in the room. The poorly handled seven percent
exemption for pensioners issue is another example of a government
that has been dogged by communication gaffes and coalition
discipline problems from the beginning. With municipal elections
approaching in October, Bachelet faces a tough challenge in pushing
through her program -- most of which requires new legislation -- a
task that is made more difficult by her recent loss of a majority in
Congress just as the electoral climate begins to heat up.


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