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FM AMEMBASSY SANTIAGO
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RUEHBR/AMEMBASSY BRASILIA 0927
RUEHBU/AMEMBASSY BUENOS AIRES 1513
RUEHLP/AMEMBASSY LA PAZ JUN LIMA 6206
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UNCLAS SANTIAGO 000515 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/BSC, L-DALEY 
LABOR FOR ILAB - WEDDING AND GAY 
COMMERCE FOR ITA - MANN 
STATE PLEASE PASS TO USTR FOR KALUTKIEWICZ AND ROMERO 
 
E.O. 12958: N/A 
TAGS: PGOV ECON SOCI PREL PHUM ELAB KTIA CI
SUBJECT: BACHELET'S FINAL PRESIDENTIAL ADDRESS HAILS SOCIAL 
PROTECTION, BATTLES ECONOMIC DOWNTURN 
 
REF: SANTIAGO 432 
 
¶1. (SBU) SUMMARY: In a May 21 State of the Union speech, 
President Bachelet hailed her government's achievements in 
promoting social protection, focusing on improvements in 
healthcare, housing, and education.  She took credit for 
Chile's deft handling of the global financial crisis and said 
the country is "in the best position one could hope for" to 
deal with the crisis.  Bachelet announced a new one-time 
payment of $70 (40,000 Chilean Pesos) for each of Chile's 
four million poorest in August.  Outlining the legislative 
agenda for 2009, Bachelet will propose three draft laws 
needed to complete Chile's accession to the Organization for 
Economic Cooperation and Development (OECD).  She said the 
GOC will "continue to strengthen relations with the United 
States" and thanked the Congress for passing legislation that 
will allow Chile to join the International Criminal Court 
(ICC).  The speech generated only token criticism from the 
opposition -- which has little desire to confront Bachelet 
when she enjoys an unprecedented 69 percent approval rating. 
END SUMMARY. 
 
TAKING CREDIT WHERE CREDIT IS DUE 
--------------------------------- 
 
¶2. (SBU) On May 21, President Bachelet used her final 
Presidential Address (equivalent to the State of the Union 
speech) to highlight her administration's handling of the 
global economic crisis.  Speaking before the full Congress, 
Bachelet declared that the crisis vindicated her decision to 
save windfall copper revenues early in her term.  That 
decision, along with prudent fiscal and monetary management, 
has allowed her administration to enact countercyclical 
policies to confront the crisis and cushion its impact on 
Chile. 
 
¶3. (SBU) Bachelet also argued that the financial crisis 
validated her decision to focus her presidency on social 
protection.  She explained that her policies have created a 
network of support that aids the most vulnerable members of 
society: children, women, and the elderly.  She described a 
wide range of notable social welfare achievements including 
increased access to healthcare for pregnant women and 
children, new housing construction that will eliminate 
shanty-towns by 2010, and stronger labor protection for 
sub-contracted workers.  Bachelet underscored that challenges 
remain, particularly in terms of institutionalizing reforms. 
 
CONFRONTING THE ECONOMIC CRISIS HEAD ON 
--------------------------------------- 
 
¶4. (SBU) Bachelet announced another direct one-time payment 
that will provide approximately $70 (40,000 Chilean Pesos) to 
each of four million Chileans in August, noting the paradox 
that "the crisis of the rich will create more poverty."  The 
new payment supplements a similar measure that gave 
approximately $70 (40,000 Chilean Pesos) to each of 1.7 
million Chileans in March 2009.  Bachelet thanked the 
Congress for quickly approving a law that will provide 
incentives for companies to send employees on long-term 
training instead of firing them.  She also noted the success 
of the fiscal stimulus plan passed in January, stating that 
through April, 34 percent of the $700 million allocated for 
infrastructure had been spent and 113,000 jobs had been 
created. 
 
¶5. (SBU) Bachelet revealed several other policies designed to 
mitigate the effects of the crisis.  Pension reforms that 
were originally scheduled to take place in July 2010 will now 
be implemented in September 2009, extending benefits to an 
additional 150,000 people and increasing the minimum pension 
payment.  CORFO, Chile's economic development agency, will 
offer credit to higher education students to prevent them 
from leaving school if a parent loses a job.  The GOC will 
also increase subsidies for housing and provide mortgage 
 
insurance for those who lose jobs. 
 
LEGISLATIVE PLANS FOR 2009 
------------------------- 
 
¶6. (SBU) Outlining the legislative agenda for her final year 
in office, Bachelet told the Congress that her administration 
will offer three draft laws to support Chile's accession to 
the OECD and present a draft proposal for a national public 
transportation subsidy.  She acknowledged that voting reform 
would not be implemented on her watch, but she recognized the 
historic nature of legislation that would make inscription 
automatic and voting voluntary, reversing the old system of 
voluntary inscription and mandatory voting.  She also called 
for reforms to the binomial parliamentary system (reftel) and 
the extension of voting rights to Chileans who live outside 
the country. (Septel will provide additional information on 
legislative priorities.) 
 
"WE WILL CONTINUE TO STRENGTHEN RELATIONS WITH THE U.S." 
--------------------------------------------- ----------- 
 
¶7. (SBU) While her speech focused almost exclusively on 
domestic issues, Bachelet told the Congress she will continue 
to "strengthen relations with the United States."  She 
highlighted the Chile-California partnership and strategic 
agreements in areas such as renewable energy and education. 
 
¶8. (SBU) Bachelet thanked the Congress for approving 
legislation on May 20 that will allow Chile to accede to the 
ICC.  Calling the approval a "transcendental step in the 
fight for human rights," Bachelet received sustained applause 
from the audience.  She also cited international praise for 
Chile's social policies and its strong leadership as UNASUR's 
first president as evidence of Chile's positive standing in 
the world. 
 
MUTED CRITICISM FROM THE OPPOSITION 
----------------------------------- 
 
¶9. (SBU) Alianza Presidential candidate Sebastian Pinera 
responded to Bachelet's speech by criticizing her failure to 
mention agricultural issues.  He also identified crime and 
poor management of government resources as problems that 
Bachelet failed to adequately address in her remarks.  Other 
members of the opposition judged the speech as lacking 
"self-criticism."  Instituto Libertad, a conservative 
think-thank, reported that the Bachelet Administration had 
only completed 14 percent of its promises from the 2008 
Presidential Address, contradicting a GOC claim that it had 
accomplished 90 percent of its goals. 
 
COMMENT 
------- 
 
¶10. (SBU) Promoting social protection has been the hallmark 
of Bachelet's administration, so it was not a surprise that 
she used her final Presidential Address to highlight 
achievements in these areas.  Bachelet will likely use her 
remaining time in office to institutionalize prized social 
welfare programs.  The opposition's response included only 
token criticism, indicating little desire to confront 
Bachelet when she enjoys an unprecedented 69 percent approval 
rating. END COMMENT 
SIMONS