Bachelet seeks consensus in cabinet reshuffle but keeps reforms on track
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Bachelet seeks consensus in cabinet reshuffle but keeps reforms on track

Fourteen months into the her second mandate, Chile’s President Michelle Bachelet staged an unprecedented political move when she announced the resignation of her entire cabinet and gave herself 72 hours to form a new government — all during a talk show.

After 108 hours of intense speculation, Bachelet eventually revealed the new government on Monday morning, amounting to eight cabinet changes out of 23 ministerial positions.

Bachelet’s cabinet reshuffle has been marked by radical changes, including the fall of Interior Minister Rodrigo Peñailillo and Finance Minister Alberto Arenas, seen as Bachelet’s right-hand men and key figures in the campaign and elaboration of her political agenda.

Bachelet is the first president since democracy was restored in Chile to restructure her entire political team, composed of the Interior and Finance Ministers and the cabinet-level positions of Chief of Staff and Spokesman, which had been filled by Ximena Rincón and Alvaro Elizalde, respectively.

The Burgos-Valdés duo marks a move toward the center 

The appointments of Jorge Burgos and Rodrigo Valdés as the new heads of the Interior and Finance Ministries have been the highlight of the latest cabinet reshuffle. This move has largely been interpreted as a deliberate decision to steer the administration toward the center, while, on the economic front, Valdés has brought hopes for a re-activation of the sagging economy.

Jorge Burgos, a Christian Democrat and veteran of Chilean politics who started his career in the Interior Ministry, has replaced the embattled Rodrigo Peñailillo. An experienced, well-respected political figure both within the left-wing coalition Nueva Mayoría and among the opposition, Burgos enters the government as a “facilitator,” a key conciliatory figure necessary to revive political dialogue and lift the government out the current stalemate.

Unlike his predecessor, however, the new Interior Minister may not be Bachelet’s closest ally. Burgos has already hinted at his disagreement with how the President envisions constitutional reform. Still, Burgos appears to be a safe bet whose appointment has been welcomed by all political factions, including the bellicose right-wing parties unhappy with the president’s proposed reforms.

Joining Burgos, in a political pairing hailed by Chile’s press, is Rodrigo Valdés, the MIT-educated economist newly appointed as Finance Minister to replace Alberto Arenas, who became the first Finance Minister to be dismissed since the return to democracy.

With little political baggage but extensive experience in the public and private sectors, including with Chile’s Central Bank, Barclays and the IMF, Valdés’ appointment sends a strong signal that Bachelet is serious about boosting the economy and restoring the trust of the business community lost during Arenas’ tenure as minister, primarily as a result of unpopular tax reform.

Valdés will also be tasked with re-injecting trust and legitimacy into the relationship between business and politics, which currently suffers from disenchantment on both sides.

This appointment was well-received by the business community, with Santiago’s stock exchange surging to close at a two-year record high on Monday, following the announcement.

Out with the new faces, in with the old elite?

In May 2014, Bachelet raised eyebrows by appointing young faces instead of political dinosaurs to head key ministries. Former Interior Minister Rodrigo Peñailillo, Chief of Staff Ximena Rincón and Spokesman Álvaro Elizalde became the faces of a phenomenon later know as the “backhoe,” referring to Bachelet’s reformist philosophy seeking to uproot the country out of the dictatorship’s legacy.

All but Rincón, who has been re-assigned to the Ministry of Labor, have now been dismissed from the government.

Speaking to reporters following his appointment, new Interior Minister and head of the Cabinet Jorge Burgos made his stance crystal clear.

“I don’t like backhoes because they work backwards and this country needs to move forward,” Burgos said.

The 40-year-old Peñailillo, a rising political star and Bachelet’s protégé, saw his stock tumble based on his handling of the Caval corruption scandal. The last straw came in the form of allegations that he received money from Giorgio Martelli, Bachelet’s fundraiser during the presidential campaign and the owner of a company now linked with a mining conglomerate accused of illegally funding political campaigns.

Despite the media’s suggestions that these changes spell the end for Bachelet’s reformist philosophy, Burgos is – notwithstanding his influence – still surrounded by political figures committed to the president’s ideology or averse to the old establishment.

Ximena Rincón, former Chief of Staff, is now Labor Minister, which is not insignificant considering the ongoing labor reforms, while Marcelo Díaz, the newly appointed Spokesman, is a young former ambassador to Argentina known for his fierce opposition to Camilo Escalona, an established figure from the Socialist Party.

‘Bacheletism’ is undoubtedly suffering from a backlash. The reformist component of the president’s agenda, however, is far from over, but requires, as Bachelet said during her speech on Monday, “renovated energies.”

The decision to keep Minister of Education Nicolás Eyzaguirre at his post despite educational reforms being fairly unpopular these days, is perhaps a strong indicator that Bachelet is committed to pushing ahead with her initial plan.

Changing the entire political team – including the Interior Minister, Chief of Staff and Spokesman – is, however, an indication that the trouble lies in the conduction and communication of the government, rather than the substance itself.

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