“Ours will be a government of reconstruction”
— Sebastian Pinera, BBC, 2010
On February 27, the good people of Chile awoke to the violent shivers of an earthquake that measured 8.8 on the Richter scale. Barely two weeks later, even as Chileans were yet to recover from the shock, Sebastian Pinera took charge as Chile’s new President.
During his campaign, he had pledged to push Chile’s annual growth up to 6% across the next four years and create at least a million new jobs. Multiple voices sounded out a skeptical tune and now with the tremor playing spoilsport, Pinera’s critics have grown.
So far, Pinera, one of Chile’s richest businessmen, has shown remarkable poise in fending off these doubts. As soon as he assumed office, he acted deftly, appointing new regional government chiefs to tend to the worst affected areas.
The massive quake and ensuing tsunamis that claimed hundreds of lives left damages estimated at $30 billion. The quick thinking Pinera plans to revise Chile’s 2010 budget in order to accommodate the unexpected expenditures. A special reconstruction fund is in the pipeline, which will be serviced through monetary austerity, Chile’s savings and through loans. Chile is the world’s largest producer of copper, and revenue from exports of the metal will be diverted towards rebuilding the nation. Pinera’s strategy also involves taking advantage of Chile’s status as one of the most economically stable nations in Latin America. Since the country sports an A+ credit rating and is considered a low-risk market, Pinera is aware that Chile can raise money from international markets on a relatively cheap and easy basis.
Pinera’s nimble strategies perhaps come from being an adventurous sportsman, where split-second decisions can save one’s life. At 60, Pinera continues to indulge in adrenaline-charged sports, like rafting, paragliding, scuba diving and flying his private helicopter. Evidently, Pinera is a restless personality, a reflection of his other more prominent businessman avatar.
Pinera’s business interests are as diverse as his extracurricular activities. He introduced Chile to the convenience of credit cards, which was the main source of his fortune, today worth $1.2 billion, according to Forbes. He is the owner of a television channel as well as Colo Colo, a popular football club in Chile, and holds a major stake in LAN, the largest airline in the country.
Entering politics was easy enough. Pinera, who holds a doctorate in economics from Harvard University, was already politically connected through his brother who was a labor minister under the Pinochet government. Pinera started off as a senator in 1989 and in the next decade, rose to being the president of his National Renewal Party.
After losing the presidential elections in 2005 to Michelle Bachelet, he won at the 2009-10 polls with Bachelet ending her last term. Pinera’s thumping win was propelled partly by public dislike for Bachelet’s increasingly fractious Concertacion Party. Another reason was the party’s lack of response towards the population’s basic demands, such as increased wages, better healthcare and education, and stringent measures to deal with rampant corruption.
Pinera has promised to address all of this and more. And he seems to be making good progress. His new cabinet consists of technocrats and highly qualified people holding degrees from prestigious foreign universities. His swift actions have already channeled $2.5 billion towards rebuilding homes and property smashed by the quake. Pinera, who is known for his sometimes exaggerative descriptions, said in the New York Times that, “these extraordinary reconstruction and repair subsidies will be given out over the next 24 months.”
He is, however, acutely aware of the challenges ahead. Chile has suffered financial wounds amounting to around 18% of the GDP. Finance Minister Felip Larrain estimates that Chile will be set back by around 1.5% from its projected GDP growth, registering slower progress at around 5% instead. Therein lies Pinera’s biggest test. He has to find the fine balance between spending in order to physically repair a quake-torn nation, and restraint to bring an even worse hit economy back on its feet.
Pinera’s business acumen mixed with his daring personality might be the formula to attain that balance. “Chile isn’t the biggest, richest or most powerful country in the world, but we should dedicate ourselves to transforming it into the best country in the world,” he stated in the speech after winning the election. For Pinera, the adventure has just begun.
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© Thomas White International, Ltd. 2019