P 232053Z MAY 08
FM AMEMBASSY SANTIAGO
TO SECSTATE WASHDC PRIORITY 3286
INFO AMEMBASSY BUENOS AIRES 
AMEMBASSY LIMA 
AMEMBASSY LA PAZ 
AMEMBASSY BRASILIA 
AMEMBASSY MONTEVIDEO 
AMEMBASSY ASUNCION 
AMEMBASSY CARACAS 
DEPT OF ENERGY WASHINGTON DC
DEPT OF LABOR WASHDC
DEPT OF TREASURY WASHDC
CIA WASHDC

UNCLAS SANTIAGO 000480 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON SOCI ELAB CI
SUBJECT: BACHELET'S STATE OF THE UNION: EDUCATION AGAIN 
 
¶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 
Chileans. 
 
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." 
 
Reactions 
--------- 
 
¶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. 
 
URBAN