Transcript - Focus Americas Podcast Ep. 2: Chile’s encouraging path to a new constitution

Welcome to Focus Americas.  The new podcast brought to you by Scotiabank Perspectives. Focus Americas examines economic and political developments affecting countries across the Americas.  Host Phil Smith, head of Investor Relations at Scotiabank, talks to thought leaders inside and outside the bank for their insights on forces that are driving those developments, from Canada in the north to Chile in the south. 


Philip Smith:  Hello, and welcome to Scotiabank’s Focus America podcast series.  Today’s episode is the constitutional process in Chile.  My name is Philip Smith of Scotiabank, and I will be hosting today’s podcast.  My distinguished guest today is Mr. Tom Shannon, Senior International Policy Advisor with the firm of Arnold and Porter in Washington.   Ambassador Shannon is an expert in the field of international relations, having had more three decades of government service and diplomatic experience, serving most recently as Under Secretary of State for Political Affairs, the third highest ranking position at the US State Department.  Ambassador Shannon holds the personal rank of career ambassador as the highest ranking member of the US Foreign Service.  He also served as ambassador to Brazil and has also served in the US Foreign Service at embassies in Guatemala, South Africa, and Venezuela.  As such, he is uniquely qualified to opine on Latin American affairs, and we are pleased to have him with us as our guest today. 

So, Tom, maybe if I can start off, Chile has been in the news recently, certainly for the past year, it started somewhat inauspiciously with riots back in, I guess, October of 2019 and that was followed by a series of government commitments to hold a referendum on the constitution which took place on October 25th, so maybe if you could pick up there and think about that the process from here on out for Chile.  Can you provide some historical context on the Chilean constitution?  I’m not sure it’s something many of our listeners are that familiar with.  Maybe refer to its origins, you know, what’s in it, and what the impact has been on Chile. 

Tom Shannon:  Sure.  Thank you very much, Phil.  It’s a real pleasure to be with you today and a real honor to be on the Scotiabank podcast and speaking to your many listeners, and thank you very much for your kind introduction.   The topic of Chile’s constitution and national plebiscite on a new constitution, the approval by the Chilean people of a new constitution, and then of course the process that Chile is now in of beginning to build out what that constitutional convention will look like is historic from Chile’s point of view.  As you noted, Chile’s current constitution, which was written and approved in 1980, was done so under the dictatorship of Augusto Pinochet and Chilean military government, and it has endured across the several decades, even while Chile has democratized and has dramatically expanded its economy and its position as a major trader in Latin America and throughout the world because it provided a set of guidelines that Chileans found useful in addressing the transfer from authoritarian government to democratic government and from a largely closed economy to an open economy and because the Chilean’s historically found a political ability to manage political differences and to build political coalitions across significant divides in Chile’s political spectrum that allowed Chile to pursue its democratization and its economic growth with significant political stability.  This actually begins to break down several years ago as Chilean students begin to take to the streets to complain about conditions in Chile’s education system and especially in the tertiary or university education system and then the challenges that many Chilean students faced finding jobs as they left university.  These kinds of protests bubbled in Chile for many years, but, as you noted, in October of 2019, in the aftermath of a decision to raise transportation prices in major cities, this bubbling became much more than a bubble.  It became a full-throated boil, and Chileans moved into the streets to protest what they considered to be inequality in their own society and engaged in significant confrontation with Chilean security services and police forces, something that Chile had not seen in a long time.  The political impact of this was dramatic inside of Chile.  What’s interesting about Chile and where Chile needs to be applied is that although there was an initial effort to control and repress demonstrators by using the police, it became quickly apparent to Chilean political authorities that this was not going to work and that, in fact, the Chilean government and Chilean political leaders needed to find a way to engage with demonstrators, and this led to a series of negotiations in which Chile decided that the best way to end street violence and end political turmoil was by offering the Chilean people a plebiscite as to whether or not they wanted to replace the constitution of 1980 with a new constitution, and this worked.  In this regard, Chile is to be congratulated, and the Chilean political leadership is to be congratulated because they recognized that the solution in a democratic society to this kind of turmoil was more democracy.  In other words, offering people a voice in establishing their national direction and purpose through a new constitution.  The vote that we saw on October 25th was the Chilean people saying in a very loud and united voice, with 78% of the population voting in favor of a new constitution, to begin the process of writing that new constitution. 

Philip Smith:  So, you mention that the constitution did endure for quite a long time but that obviously the students and some other constituencies in Chilean society were not happy with obviously inequality and other things, but could you, you know, was there one specific issue?  Was it simply the students or, you know, given, it seemed to be a rather leaderless protest and somewhat spontaneous so were there other groups or interests involved, and that obviously reflects on the constitutional process, so are there a lot of people that the constitutional reform needs to please here going forward? 

Tom Shannon:  Well, the fact that 78% of Chileans who participated in the plebiscite voted in favor of a new constitution means that that large swath of Chilean society believes that the older constitution had run its length, in other words, needed to be renewed and fixed in some fashion.  The existing government of President Pinera and his political party had offered the possibility of amendments to the constitution, in other words, to maintain the core of the 1980 constitution but just change things that political parties and other political leaders thought were inappropriate or no longer useful.  What’s striking is that the Chilean people did not want that approach.  They wanted a wholesale rewriting of the constitution.  It’s hard to say that there are one or two aspects of the 1980 constitution that were either upsetting or no longer viewed as valid or legitimate for 21st century Chile except to say that for many Chileans the 1980 constitution was seen as one of the last vestiges of the dictatorship of General Augusto Pinochet and in that sense many Chileans thought it was time for them to leave their history behind them, to shake this off the Chilean body politic and instead to concentrate on how to shape Chile for the rest of the 21st century. 

Philip Smith:  So, you mentioned obviously there was a very strong turnout, 78% voting in favor.  Were there any other sort of key takeaways you read into the vote?  Any surprises at all or anything that investors or observers of Chile should keep their eye on going forward? 

Tom Shannon:  There’s a couple things worth mentioning.  While the approval of the constitution, a new constitution, was significant with a 78% approval vote, the turnout itself for the vote was only 51%.  By American standards, that’s pretty good, but by the Chilean standards could be better, but the vote itself was clear in terms of its direction.  What was presented to the Chileans was really a series of questions.  The first question was should a new constitution be drafted, and that is what got 78% of the vote.  The second question asked the Chilean people how it should be drafted or by whom.  In other words, should it be drafted by a constitutional convention, which would be directly elected by the people, or should it be done by a mixed constitutional convention in which half of the members would be existing members of parliament and half would be citizens elected directly to the convention, and 79% of Chileans chose the first option, in other words, constitutional convention that was directly elected.  What’s striking about this is that effectively the Chilean people were rejecting the sitting parliament as a participant in the convention writing process.  This was a significant blow to traditional Chilean political leadership and traditional Chilean political parties. 

Philip Smith:  So, you mentioned that as we go forward then, the process going forward, so you have a constitutional convention and then you have the existing sitting parliament, you know, how will those two interact going forward, or will there be any interaction at all and is there a potential for, you know, a political schism of sorts between those two bodies? 

Tom Shannon:  That’s a great question, and it’s an issue that every country that puts in place a constitutional convention has to deal with.  The reality is that Chilean politics will continue independent of the constitution writing process.  Let me just take a second to kind of lay out kind of what the schematic looks like.  The vote in October approving a constitutional convention and approving direct election of members of the constitutional convention sets up a vote to elect the members of that constitutional convention, and that vote will take place in April of next year.  Once in place, the members of the constitutional convention will have nine months to write a new constitution with a three month kind of grace period if they need it to continue the negotiation and writing of the constitution, with the idea being that the constitution would then be presented to the Chilean people in a referendum, probably in August of 2022.  So, you have a fairly tight period of time in which a constitutional convention has to be elected, organize itself, pass its rules and its kind of mechanisms of order, and then get to work negotiating and writing a new constitution and then presenting it to the Chilean people.  Of course, while all that’s taking place, Chile still needs to be governed and so it will have a president, it will have a sitting parliament, and, in fact, it will have a presidential and parliamentary election in November of 2021, so you’re going to have quite a fraught and interesting presidential and parliamentary election process because it will take place right in the middle of the writing of a new constitution.  So, one can imagine politically that the issues that the constitutional convention is dealing with will be the same kinds of issues that presidential candidates and parliamentary candidates will be dealing with.  At this point, absent a clear understanding of what the rules of order will be for that constitutional convention, it’s difficult to anticipate where the constitutional convention and parliament might converge or cross each other, but the way in which the referendum was written and the way in which it was presented and the way in which the constitutional convention will function, my understanding is that the rules of order that will be used to define how the constitutional convention behaves, how it considers and approves articles to a constitution, requires a two-thirds approval by the constitutional convention or the members of the constitutional convention, which will probably ensure that there is a broadly accepted approach to the writing of the constitution and a broadly accepted understanding of the role of the convention, so I think that Chile is going to find a way to navigate this period of time without the constitutional convention and the parliament converging on each other or creating a political conflict or confrontation. 

Philip Smith:  Well, that’s certainly good to know from a sort of governance perspective going forward here.  Now, if things weren’t interesting enough, I guess with the constitutional assembly and the parliament, we’re gonna throw a presidential election into the mix in 2021.  Do you see either the constitutional process or the presidential election having an impact on each other? 

Tom Shannon:  I can see, well, yes.  I think the short answer is yes because, as I noted, this is going to be a very fraught political environment, and it will be an environment in which Chile, like the rest of the world, will hopefully be emerging from the pandemic and the COVID crisis that has settled on us and will be addressing the economic and the social consequences of that pandemic.  When you combine the social impact, the impact on public health systems, the impact on the economy, and then the political impact plus the whole process of writing a constitution, I would think that the presidential election itself and the candidates who will be running in that election will know and understand that in many ways the Chile that they would govern will be a Chile structured by a constitution that was still in the process of being written and so I think the effort to articulate viewpoints, present those viewpoints, and then hope that they resonate inside a constitutional convention would be significant. 

Philip Smith:  So, you mentioned going forward that April of 2021 would start the nine month period to write the new constitution and there would be a three month grace period.  When you think about going forward then here, are there any outcomes considered likely at this point, and, if so, what are the implications for Chile, life in Chile, broadly?  Is this reform to expect the education system, the social safety nets, the pension system, those sorts of things, to change materially or is it simply too early to speculate? 

Tom Shannon:  I think it’s too early to speculate on the specific nature of changes, but I don’t think it’s too early to speculate on the need for changes.  You know, Chile in many ways has been a remarkable country in terms of its ability to manage a transition from dictatorship to democracy and to do so with remarkable ability and stability and has had political leadership that was amazing, from my point of view, in its ability to navigate the really tough issues that Chile faced in addressing the history of the military dictatorship, what it did to Chilean society, and also how it was able to preserve an economy that had begun to produce significant wealth for Chile.  What has become apparent over the past several years is that as prosperous as Chile has been, it still suffers from very significant inequality inside of Chile and a whole kind of sector of Chilean society that feels itself quite vulnerable to economic downturn.  In some instances, it’s because of the nature of employment in the Chilean economy, the nature of the education system and how students move from trade schools and high schools and universities into the workforce, but some of it also has to do with a significant privatization that Chile underwent in which many Chileans feel that absent a stronger social safety net in Chile that they are very vulnerable should they find themselves out of work or without access to private insurance, and therefore I think that there will be a social focus in this constitutional convention that is going to be looking at how do you preserve the engines of Chile’s economic growth while ensuring a more equitable distribution of wealth, a reduction in inequality, and especially a reduction in the sense of vulnerability, especially in the middle class and lower middle class, and providing Chileans with some sense that they do have a state to turn to in the event of a personal catastrophe. 

Philip Smith:  So, some have argued that this sort of process that Chile is going through is a bit of a transition from more of a neoliberal kind of model to a social democratic model.  Would you agree with that, and are there any other parallels to other countries that have gone through a similar process or evolution say in North America or Europe or elsewhere in the world? 

Tom Shannon:  Well, remember, Chile was governed for many years by the Concertacion, which is really a grouping of parties on the left that was led by socialist presidents, so, in many ways, Chile has been a social democracy and not a neoliberal country, but I do think that what we’re seeing here really is the impact of the extraordinary changes that technology and globalization are driving around the world and that, while the model of the Concertacion worked well and the social democratic framework worked well for Chile at a certain period of time, the changes that Chile has experienced across these decades, which have been accelerating with time, have actually required that Chile take a fresh look at its economic and its political structures to determine what’s going to work best.  In this regard, you know, looking backwards might not be kind of the right way.  I mean, there are any number of countries that have gone through constitutional conventions and, quite frankly, especially in Latin America, countries as they make transitions from authoritarian governments to democratic government also rewrite their constitutions.  Brazil did this when it moved from military government to civilian government, Columbia, although Columbia has the longest standing democracy in South America, Columbia has also gone through several exercises of rewriting and updating constitutions, as have many of the Central American countries, and, I mean, if there are lessons to be learned from these, it’s that these constitutions tend to overly long, overly detailed and specific, and oftentimes create a sense of expectation that is difficult to meet in reality.  What I mean by that is the tendency is to put into constitutions a whole series of economic, social, and cultural rights that then generate an expectation of an outcome that many countries can’t then meet because they don’t have the economic wealth or the resources to do so, and I think what Chile is going to have to do is kind of look at what countries have done around the globe, try to figure out how best to create a model that’s going to allow Chile to fashion a political, economic, and social structure that has the flexibility that allows Chile to adapt to the circumstances that it’s going to face in a global economy, especially one emerging from a pandemic, and then try to ensure that it addresses the political problems it generated from the constitution in the first place. 

Philip Smith:  So, would we think, looking now out for Chile, how would you sort of describe your outlook for Chile from here on?  Is it obviously dependent on the constitutional process but also, you know, the pandemic plays a role, the economy plays a role, as well, but how would you describe, you know, the outlook you would have for Chile at this time? 

Tom Shannon:  For me it would be positive.  I mean, Chile has big challenges in front of it, but Chileans have shown an ability to face these challenges and face them with a clear eye and to understand what it is they have to do.  They have found a way domestically to fashion the kinds of dialogue and cooperation that is needed to move forward.  It is my hope that building off the example of using more democracy to address the kinds of political and social turmoil that Chile was experiencing will be seen by the Chileans themselves as a smart thing, as a wise thing, and that as Chileans engage in debate around first the vote for the members of the constitutional convention and then once the convention is seated following the activities of the members of the convention and how they begin writing this process, I think that what you’ll see is an effort by Chileans to preserve those aspects of Chilean political and economic life that have generated stability and economic growth and have attracted foreign investment and have made Chile such an important economic and commercial partner for so many countries like the United States and Canada, but at the same time will be able to address the underlying problems that generated the political crisis and begin to look for ways to enhance distribution of wealth and ensure people that they will be protected in the events of personal catastrophe. 

Philip Smith:  Well, I think that’s certainly cause for optimism and I think it’s a process I think the world is gonna be watching with keen interest as we go forward.  Tom, any sort of closing thoughts before we wrap up the podcast today? 

Tom Shannon:  I would just say that I’ve had the pleasure of working on issues related to US and Chile relations for quite some time, and my experience with Chile has been remarkably positive and I’ve come away deeply respectful of the country and its culture, deeply respectful of what Chileans have been able to accomplish over time, and I really do think that how Chile manages the challenges in front of it could very well be an example to many other countries who are facing similar moments or similar political crises and recognizing that ultimately the purpose of democratic governments is not only to provide individuals a voice in determining national destiny, it’s also to allow individuals to have a voice in determining their own destiny and really looking to their government to respond to them by offering them the opportunities, the resources, and the security they need to achieve their full potential as human beings.  In this regard, I think Chile is one of the leading lights in showing how you use democratic government to achieve a democratic society, and I wish them the very best. 

Philip Smith:  Well, Tom, thank you very much.  I certainly appreciate your comments.  I think with that we’ll wrap up today’s episode of our Focus America podcast series.  I would like to thank Ambassador Tom Shannon for his comments today.  We greatly appreciate his insight and analysis, and we certainly look forward to having him as a guest again soon.  Thank you all very much for participating today.  This concludes today’s podcast.