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Cablegate: Chile: Bachelet and President-Elect Pinera Working Towards A

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FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0652
INFO WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
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RUEAIIA/CIA WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC

UNCLAS SECTION 01 OF 04 SANTIAGO 000033

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON CI
SUBJECT: CHILE: Bachelet and President-elect Pinera Working Towards a
Smooth Transition

1. (U) Summary: With the inauguration of president-elect
Sebastian Pinera less than six weeks away, both Pinera and outgoing
president Michelle Bachelet are focused on making the historic
transition smooth and efficient. Both sides have appointed
transition teams who are working closely to maximize
information-sharing and to complete top priorities before the March
11 inauguration. End Summary.

Cooperation During the Transition, and Beyond

--------------------------------------------- -----------------

2. (U) Both sides, according to press reports, have graciously
tried to make the transition work and do what is best for the
country as a whole. This historic transition will be the first
time in 20 years that the government has had to hand over the keys
to the opposition. The last transition of this kind was when
Pinochet handed over the offices to President Aylwin's government,
and reportedly, information was not shared, drawers were empty, and
files had disappeared. The transitions since, which were always
from one Concertacion government to another, have been much more
informal than the current transition.

3. (U) Pinera has said that his presidency will be a "second
transition" -- the first being the 1990 transition from
dictatorship to democracy -- and has spoken of promoting a second
period of a "democracy of accords." The term "democracy of
accords" was coined during the presidency of Patricio Aylwin
(1990-1994) to describe several legislative agreements between
moderate conservatives from Pinera's National Renewal (Renovacion
Nacional, or RN) party and the first Concertacion government of
Patricio Aylwin. Pinera, then a Senator, was one of the promoters
of the "democracy of accords," where RN members of the opposition
sought to cooperate with the first Concertacion government.

Bachelet's Transition Plans

-----------------------------------

4. (U) Outgoing president Bachelet has appointed Interior Minister
Edmundo Perez Yoma to handle her administration's side of the
transition. In addition to Perez Yoma, the team includes Finance
Minister Andres Velasco, Undersecretary General of the Presidency
Edgardo Riveros and Bachelet's chief of staff Rodrigo Penalillo.
They pledge to provide a thorough and orderly hand over of
information. Working level government contacts have told us that
they have begun to compile briefing material for the incoming
government, summarizing major programs and upcoming events.
Bachelet has promised that she will govern until the very last day,
March 11 - meaning both that her government will remain active and
also that she has no intention of "co-governing" with Pinera.

Pinera's Transition Team - The Fantastic Six

--------------------------------------------- ------------

5. (U) Harvard-educated lawyer Rodrigo Hinzpeter, Pinera's campaign
manager and right-hand man, has been appointed to lead the
transition team. Hinzpeter is a close Pinera advisor and also
served as campaign manager for his 2005 attempt at the presidency.
Former Chilean Ambassador to India Alfonso Silva has been assigned
to handle protocol for the inauguration ceremony. Other members of
the "iron circle" transition team include:

-- Cristian Larroulet (56), one of the "Chicago Boys" (University
of Chicago-educated Chilean economists who shaped Pinochet's
economic model), he served in several government positions

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throughout the military government (1973-1990). After the return
to democracy, Larroulet co-founded the conservative think tank
Liberty and Development Institute (Libertad y Desarollo). Although
he has no official political party affiliation, he is close to the
conservative Independent Democratic Union (UDI) party, and worked
on several presidential campaigns for UDI candidates.

-- Ignacio Rivadeneira (34) has been close to Pinera since 1999
when he was recruited as campaign manager for Pinera's presidential
bid that year. Former vice president of the RN, he was campaign
manager for Pinera in the 2005 elections and speechwriter in the
most recent campaign. Rivadeneira holds a law degree from the
University of Chile and recently completed a Master's degree in
public policy at Harvard University.

-- Miguel Flores (47) is a long-time member of the UDI party,
having served as its General Secretary (1989). Flores is director
of the UDI's Jaime Guzman Foundation, whose flagship program
recruits young professionals for public service in municipalities
with UDI mayors. For the transition, he has been charged with the
task of identifying young professionals to serve in the new
government. Flores holds a law degree from the Catholic University
of Chile.

-- Maria Luisa Brahm (52), a lawyer and friend of Pinera's for the
past 20 years, is the executive director of the RN's Freedom
Institute think tank (Instituto Libertad). She helped Pinera
develop his platform for the 2005 elections and, according to press
reports, was the first to be called as an advisor for his recent
campaign.

-- Magdalena Pinera (34) is the oldest child of the
president-elect. Considered to be the most "political" of his
children, she was deeply involved in the presidential campaign,
especially with technology and new media. Previously, she worked
as a history teacher at one of Santiago's elite private schools.

6. (U) In an initial transition team meeting on January 20,
Hinzpeter and Larroulet met with Perez Yoma to begin discussing
details of the transition. Their next meeting, on February 8, will
kick-off a series of bilateral meetings between outgoing ministers
and ministers-designate. According to press reports, Pinera's team
has requested Government Controller Ramiro Mendoza to instruct a
public administration workshop for them at the end of February or
first week of March.

Pinera: Pre-Inauguration Priorities

---------------------------------------------

7. (U) In line with promises made during his campaign, Pinera is
scheduled to sell his 26% stake in LAN Airlines before his March 11
inauguration. Pinera has stated that the money earned from this
sale (estimated at close to USD 1.5 billion) would be deposited
into a newly created blind trust. Since Pinera's presidential
victory, critics have focused on his delay in finalizing the LAN
deal, citing transparency issues and a potential conflict of
interest.

8. (U) Although Pinera won't announce his cabinet until the week of
February 8, local press is already mentioning names of potential
ministers. Pinera assures that the cabinet will include younger
leaders and women, but he will not attempt cabinet-level gender
parity initiated by Bachelet. Pinera has reportedly shown a
fondness for the "Sarkozy model," which would allow the
Concertacion to hold onto a few ministerial positions. Speculated
names include Housing Minister Patricia Poblete, Ambassador to the
UN Heraldo Munoz, and Foreign Minister Mariano Fernandez. The
question is, will any of these Concertacionistas actually accept

SANTIAGO 00000033 003 OF 004


his offer? To fill the over 1,000 sub-ministerial appointed
positions, Pinera and his advisors have been feverishly reviewing
the piles of resumes that were sent to conservative think tanks as
well as directly reaching out to prospective appointees.

Bachelet: Non-Stop Until March 11

---------------------------------------------

9. (U) Bachelet plans to maintain her busy travel schedule
throughout the rest of her administration. Upcoming regional
travel includes Guatemala, Mexico, Argentina, Uruguay, and Haiti.
Bachelet and Pinera will attend the Rio Group meetings in Mexico,
where Chile will assume the role of President Pro-tempore.
Bachelet will also travel extensively throughout Chile over the
next two months. While many Santiaguinos abandon the capital for
the beach during much of February, Bachelet is likely to take just
a few days of vacation.

10. (SBU) Chile needs to provide on March 9 its response to Peru's
challenge to its maritime border in the International Court of
Justice in the Hague. To ensure continuity, the Bachelet
government had been exchanging information with advisors to the
various presidential candidates before the election. The
government is now reviewing its submission with foreign policy
advisors in Pinera's transition team.

11. (U) By February 12, Bachelet must designate three new board
members for state-owned copper company Codelco. Once in office,
Pinera will have the option to change the three board members
appointed by Bachelet. However, according to local press, Bachelet
is likely to choose directors who are close to Pinera rather than
Concertacionistas so that they will be able to serve on the board
for longer than just a few months.

12. (U) Before leaving office, Bachelet is working non-stop to
finalize emblematic projects and to get a few key pieces of
legislation passed. Known as "the President of Social Protection,"
Bachelet is preparing a massive International Women's Day event for
March 8 as well as a ribbon cutting ceremony for the 3,500th
government-run day care center. Bicentennial projects include
renovations to the national stadium and the first phase of
construction for a major new cultural center. Bachelet is hoping
that a proposed law, which would require the president of Chile and
other high level government authorities to hand over the management
of their investments to blind trusts, will be passed before her
departure. However, considering the legislation still needs to be
approved by the lower house before being presented to the Senate,
and Congress is only in session for five working days before the
inauguration, it is unlikely that the law will be passed under
Bachelet's command. Other top priorities include the creation of a
Public Security Ministry, a new Superintendent of Educational
Quality, and reforms for the national prison system.

13. (U) The United States has factored into the Bachelet
administration's efforts to wrap up ongoing projects before the end
of her term. On January 12, the U.S. signed a new extradition
treaty with Chile, and on February 4 the two countries will sign a
double taxation treaty. In addition, the United States and Chile
have identified joint development projects in other countries in
the region, advancing an initiative that was launched when Bachelet
visited Washington in June, 2009.

Comment

-------------

14. (U) The exemplary courtesy and transparency that both
presidential candidates and President Bachelet displayed during the

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January 17 election has continued into the transition season.
Although unaccustomed to transitioning national leadership from one
political coalition to another, both sides are working hard to make
the handover a success. End Comment.
URBAN

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