Cablegate: Presidential Candidates' Economic Advisors Outline

This record is a partial extract of the original cable. The full text of the original cable is not available.




E.O. 12958: N/A


1. Summary: Economic advisors for the three leading
presidential candidates outlined their respective candidates'
positions on June 22 before 200-plus members of the Chilean
and foreign business communities. The three agreed the Lagos
Administration had made significant achievements in the
macroeconomic area, but offered differing views on how to
address shortcomings and grow the Chilean economy over the
next 10-15 years.

2. Presidential front-runner Michelle Bachelet's advisor,
Jorge Marshall, said increasing productivity and reducing
poverty were the keys to achieving future growth. He claimed
only the governing Concertacion coalition possessed the
capability to lead Chile to the next level. Jose Ramon
Valente, the advisor for Democratic Independent Union (UDI)
candidate Joaquin Lavin, cautioned that Bachelet would follow
her "true socialist feelings" -- and not the advice of her
free-market advisors -- if elected. Felipe Morande, advisor
to National Renewal (RN) Party candidate Sebastian Pinera,
argued that job creation was key to future growth and
reducing poverty. End summary.

3. Economic advisors for the three leading presidential
candidates presented their candidates, positions on Chile,s
economic future to over 200 Chilean and foreign business
representatives at a seminar sponsored by AMCHAM, El Mercurio
and the Council of the Americas on June 22. The three
followed center-right National Renewal presidential candidate
Sebastian Pinera, who delivered the opening address (reftel).
Below is a summary of the comments offered by each advisor,
in order of appearance:


4. The ruling Concertacion coalition has a window of
opportunity created by the achievements of the Lagos
administration to lead Chile into the developed world. Chile
should focus its efforts in two areas: increasing
productivity and reducing inequality. Marshall identified
four factors that influence productivity: macroeconomic
conditions, microeconomic conditions, businesses, and
workforce. He noted Chile was performing well on the
macroeconomic front, but needed to do more on the
microeconomic front, such as provide greater access to
credit, and enact more flexible labor regulations. Marshall
said the problem of inequality in Chile had as much to do
with education and culture as with economics, and asserted
Chile should make a greater effort to incorporate women into
the workplace at all levels. He closed by emphasizing that
Concertacion had demonstrated over the past 15 years that it
(as opposed to the opposition Alianza) was capable of
creating the necessary governing conditions for Chile to


5. Valente said it was important to look beyond a candidate's
general statements and promises regarding economic policy,
and examine each one's "moral and political base." He argued
that Bachelet, as a socialist, would "follow her heart," and
not the free-market policies advocated by her advisors like
Jorge Marshall. "There is a big difference between Bachelet,
and the technical teams led by people like Marshall who
advise her," he said. Lavin, on the other hand, would focus
on liberty, efficiency, and solidarity, and lead Chile out of
poverty and inequality and toward democracy. Valente claimed
the GOC under Lavin would do more with less, as opposed to
more with more ("inefficiency"), or less with more
("immoral"). Using the metaphor of a bridge, Valente
emphasized the importance of all socio-economic classes
working together to create equality. "Lavin is the only
candidate who can bridge the gap among the classes," he said.


6. Job creation is the key to growing the economy and
reducing poverty. Together with de-regulation and increased
focus on education, job creation can help alleviate a number
of problems within the Chilean economy. On education,
Morande argued for greater investment in training teachers,
revamping the scholastic curriculum, and in evaluating
teachers' performance over time. He added that Chile needed
to ensure greater access to credit for all economic classes.
Morande took issue with Marshall's point that only
Concertacion was capable of governing, noting that UDI and RN
also possessed the necessary leadership and technical
capacity to govern.


--Marshall: Marshall recently departed from the board of
Chile's Central Bank, where he also served as vice president
(1993-2003). He served as Minister of the Economy (1992-93),
and Under Secretary of the Ministry of Economy (1990-92).
Marshall earned a doctorate in Economics from Harvard. He is
married and has three children.

--Valente: He earned his undergraduate degree in commercial
engineering from the University of Chile, and an MBA from
University of Chicago. (During his remarks, Valente described
himself as "one of the many Chicago boys advising Lavin.")
He has been a partner in the consulting firm Econsult since
1989, a firm which advises companies interested in doing
business in Chile, and Central and South America. He also
worked as a professor of finance and microeconomics at
University of Chile from 1989-93. He is married with

--Morande: Morande is a professor of economics at University
of Chile and former chief economist at Chile's Central Bank.
He was a visiting fellow at Stanford (2001-02), and taught
economics at the Georgetown University's study abroad program
in Chile in the 1980s/early 1990s. His brother Pablo runs
one of Chile's well-known wineries, Morande. He earned his
undergraduate degree in economics from University of
Minnesota in 1983.

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