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FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0652
INFO WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
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 
 
SANTIAGO 00000033  002 OF 004 
 
 
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 
 
SANTIAGO 00000033  004 OF 004 
 
 
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