Political scandals put brake on reform agenda

Ever since Michelle Bachelet promised major reforms to tackle inequality in her 2013 election campaign, Chile's copper miners - and the business community in general - have been on edge.

Investment plunged as companies feared the impact of a tax reform passed last year that will raise an extra $3bn a year, while executives remain jittery over a labour reform expected to be passed this year that could enhance the power of trade unions.

But after becoming president for the second time, Ms Bachelet's reform drive has hit a speed bump. Corruption scandals that have hit both sides of the political divide are distracting legislators' attention from an agenda that also includes constitutional reform.

While the rightwing UDI party has been deeply damaged by a campaign finance scandal, after politicians invoiced lithium producer SQM and financial group Penta for services that were never provided, Ms Bachelet's credibility has also been severely dented by accusations that her son and daughter-in-law abused their political influence to secure a bank loan for a lucrative property deal.

With her popularity now at around 30 per cent, compared with 83 per cent at the end of her first presidential term in 2010, Ms Bachelet has been forced to apologise for her slow response to the scandal, and even deny that she was contemplating resigning. "I didn't condemn these ethically imprudent acts that we all know about in a timely or aggressive enough manner," said Ms Bachelet on Friday, who has said she would never again seek public office after her term expires in 2018.

Analysts argue that the moderates in Ms Bachelet's centre-left New Majority coalition will gain strength as a result of the crisis, preventing her from pushing through more controversial reform proposals backed by the radical wing of her coalition.

Earlier this month, unions including the copper workers confederation organised a strike demanding changes to the proposed labour legislation.

Investment plunged as companies feared the impact of a tax reform passed last year that will raise an extra $3bn a year, while executives remain jittery over a labour reform expected to be passed this year that could enhance the power of trade unions.

But after becoming president for the second time, Ms Bachelet's reform drive has hit a speed bump. Corruption scandals that have hit both sides of the political divide are distracting legislators' attention from an agenda that also includes constitutional reform.

While the rightwing UDI party has been deeply damaged by a campaign finance scandal, after politicians invoiced lithium producer SQM and financial group Penta for services that were never provided, Ms Bachelet's credibility has also been severely dented by accusations that her son and daughter-in-law abused their political influence to secure a bank loan for a lucrative property deal.

With her popularity now at around 30 per cent, compared with 83 per cent at the end of her first presidential term in 2010, Ms Bachelet has been forced to apologise for her slow response to the scandal, and even deny that she was contemplating resigning. "I didn't condemn these ethically imprudent acts that we all know about in a timely or aggressive enough manner," said Ms Bachelet on Friday, who has said she would never again seek public office after her term expires in 2018.

Analysts argue that the moderates in Ms Bachelet's centre-left New Majority coalition will gain strength as a result of the crisis, preventing her from pushing through more controversial reform proposals backed by the radical wing of her coalition.

Earlier this month, unions including the copper workers confederation organised a strike demanding changes to the proposed labour legislation, including the creation of a minimum wage tied to the Chile's consumer price index and the elimination of sanctions for unions that strike without talking with their employers first.

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