Chile votes to tear up dictatorship-era constitution

. Oct 26, 2020
chile constitution "We want to live with dignity," says Chilean protester. Photo: Shutterstock

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This week, we cover a historic vote in Chile, where people want a new Constitution. And how Brazil’s Supreme Court can rub Beijing the wrong way.

Chile votes to bury 1980 Constitution, Pinochet’s last-enduring legacy

Despite an average of 1,500 new coronavirus infections per day, Chileans went to polling places in their droves on Sunday and voted to replace their 1980 Constitution

by a landslide 78-to-21-percent margin. The results were far from surprising, as polls prior to the vote showed that a majority of citizens were in favor of a new Constitution — some 93 percent said that guarantees for healthcare and education should become constitutional rights.</p> <ul><li>The plebiscite represents a full stop to a year of political turmoil which began in October 2019, with massive protests that often descended into violent clashes between the police and a minority of demonstrators. The crisis nearly brought down the administration of President Sebastián Piñera, who proposed the referendum as a way to preserve his cabinet.</li></ul> <p><strong>Why it matters.</strong> Chile&#8217;s Constitution was drafted under the vicious regime of Augusto Pinochet, who ruled the country by terror for 17 years —&nbsp;overseeing the death of more than 40,000 people, while torturing and imprisoning tens of thousands more.</p> <ul><li>The Constitution is often blamed for causing Chile&#8217;s massive inequality levels, which are often hidden by the country&#8217;s stellar macroeconomic indicators.</li><li>The pension model adopted in Chile has been the subject of <a href="">growing dissatisfaction</a>, as individual savings accounts have not produced returns sizable enough for retired persons to live on. The <a href="">average pensioner</a> in Chile today receives less than the minimum wage.</li><li>Critics also point out that the Constitution gives too much power to the president, with the head of state being largely able to dictate which bills get priority in Congress. Given that it was drafted by a dictator, this is hardly surprising.</li></ul> <p><strong>What comes next.</strong> On April 11, the country will elect 155 members — with an equal number of men and women — to form the constituent assembly that will draft the country&#8217;s new constitution.</p> <p><strong>Turnout.</strong> Almost 51 percent of registered voters cast their ballots on Sunday — the biggest turnout since voting was made optional in 2012. Over the past eight years, Chileans have become increasingly demotivated by electoral politics, with only 35 percent turning out at the 2016 election.</p> <p><strong>Pandemic.</strong> From a public health perspective, the vote was considered a success. &#8220;People respected social distancing in the long lines at polling stations, and everybody wore a mask and used hand sanitizer. It was a fast and organized process,&#8221; wrote Rocío Montes for <a href="">El País</a>.</p> <hr class="wp-block-separator"/> <h2>Brazil&#8217;s Supreme Court doesn&#8217;t trust China</h2> <p>In recent weeks, we have covered President Jair Bolsonaro&#8217;s growing anti-China sentiment, which has included making moves against the Asian giant within the World Trade Organization, cozying up to the U.S. on the 5G issue, and bashing a potential coronavirus vaccine merely for being developed by a Chinese lab (more below). But another branch of government could be about to raise tensions further with Brazil&#8217;s top trading partner: the Supreme Court.</p> <ul><li>At least five extradition requests from Beijing have been rejected by the court since 2019, all with the argument that there is no guarantee the convicts in question were given a fair trial. Moreover, Brazilian justices say there is no way of ensuring that China will respect penalties imposed by the Supreme Court (Brazil bans life and death sentences, as well as forced labor).</li><li>Just this week, the Supreme Court denied two extradition requests from China (by 3-2 and 4-1 votes). In one of the cases, the defendant claimed he had never been prosecuted while living in China, and that he feared he would be killed on his return.</li></ul> <p><strong>How extradition works in Brazil. </strong>China and Brazil have an extradition agreement in place —&nbsp;but it does not provide for the automatic deportation of prisoners to their origin countries. According to the Brazilian law, the Supreme Court must ensure that prisoners&#8217; human rights will be respected, that they were convicted by fair trials, and that penalties will not exceed those laid down in Brazil&#8217;s penal code.&nbsp;</p> <p><strong>Why it matters.</strong> Denying extradition is a way of questioning the legitimacy of Chinese courts — something that could very well rub Beijing the wrong way.</p> <ul><li>Former Justice Celso de Mello, who retired two weeks ago from the court, issued a decision in 2019 that encapsulates the court&#8217;s opinions regarding China: he mentioned that the &#8220;opaqueness of the Chinese judicial system&#8221; makes it impossible for him to turn a prisoner over to the Chinese state.&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>Markets</h2> <p>Shoe retailer Arezzo purchased clothing group Reserve for BRL 715 million (USD 127 million), with BRL 225 million paid in cash and the remainder with stocks. The operation adds to Arezzo&#8217;s strategy of widening its retail portfolio. Besides, it adds another BRL 662 million to its market value.</p> <p class="has-text-align-center"><strong><em>Marco Harbich</em></strong></p> <hr class="wp-block-separator"/> <h2>Vaccine, yes. But not from anywhere</h2> <p>Even potential coronavirus vaccines have become <a href="">culture wars in Brazil</a>, with President Jair Bolsonaro and São Paulo Governor João Doria warring over the CoronaVac —&nbsp;which is being developed by Chinese lab Sinovac Biotech and the São Paulo-based Butantan Biological Institute. The president has bashed the vaccine, fearing that its success could boost Mr. Doria&#8217;s chances of a 2022 presidential bid. Meanwhile, the government has reactivated its social media troll army against the &#8220;Chinese vaccine.&#8221; The tactic appears to be working, according to a survey by four universities from Brazil and Canada.</p> <ul><li>People who have a poorer opinion of the government are more likely to take the vaccine — but, overall, Brazilians tend to be more skeptical about vaccines from China and Russia.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/4135414"><script src=""></script></div> <hr class="wp-block-separator"/> <h2>Looking ahead</h2> <ul><li><strong>Interests/Inflation. </strong>On Wednesday, the Central Bank will decide on Brazil&#8217;s benchmark interest rate. Analysts have raised questions about whether the current 2-percent-a-year rate (an all-time low) will be maintained, due to a recent rise in inflation. Seen as a predictor of official inflation, the IPCA-15 index jumped 0.94 percent in October, the biggest one-month increase since 1995.&nbsp;</li><li><strong>Stock market.</strong> In the week leading up to the U.S. election, <a href="">Brazilian markets are expected to experience jitters</a>, depending on possible oscillations in polling numbers and soon-to-be-released data on the U.S. economy. American GDP is expected to increase by about 30 percent or more in the third quarter — but it remains to be seen if it will be enough to revert the lead Democrat Joe Biden enjoys in U.S. <a href="">battleground states</a>.</li><li><strong>Privatization.</strong> Economy Minister Paulo Guedes is reportedly telling his allies that the government has reached an agreement with the Senate to privatize energy company Eletrobras. It remains to be seen whether Mr. Guedes&#8217; optimism is grounded in reality —&nbsp;since the Michel Temer years, the government has been trying to privatize Eletrobras <a href="">to no avail</a>.</li><li><strong>Earnings. </strong>This week marks the earnings report season for Brazil&#8217;s big banks —&nbsp;which will offer us a glimpse into what major financial institutions expect for the economy over the next few months, when a second coronavirus wave across the globe could spark new lockdowns and another economic halt. The key data will be allowance indicators, which will show how optimistic banks are regarding unemployment and revenue.</li></ul> <hr class="wp-block-separator"/> <h2>In case you missed it</h2> <ul><li><strong>5G. </strong>The U.S. government stepped up its efforts to <a href="">lure Brazil into banning Chinese telecom giant Huawei</a> from its incipient 5G market. On Tuesday, officials of the U.S. International Development Finance Corporation, the U.S. EXIM bank, and the National Security Council offered to finance equipment purchases by Brazilian telecom operators, providing they are bought from Huawei&#8217;s competitors.</li><li><strong>Impeachment. </strong>Santa Catarina Governor Carlos Moisés was suspended from office while the State Congress analyzes an <a href="">impeachment trial</a> against him. Mr. Moisés is accused of illegally raising the wages of state prosecutors. Today, a second impeachment case against him will advance, as five judges will be selected to analyze accusations of overpricing in the purchase of health equipment for Covid-19 patients.&nbsp;</li><li><strong>Agro.</strong> The Institute for Applied Economic Research (Ipea) has revised its growth projections for the Brazilian agricultural sector from 1.6 to 1.9 percent. Ipea based its new analysis on promising crop forecasts, notably for soybeans (+7 percent), coffee (+21 percent), and corn (which remains stable at record levels).</li><li><strong>Recovery.</strong> São Paulo State Governor João Doria launched an economic recovery plan, aiming to attract BRL 36 billion (USD 6.4 billion) in investments by way of concession deals, promising to <a href="">create 2 million jobs</a> over four years in the process. The plan comes as a consequence of the administrative reform passed by the State Congress last week, aimed at reducing public spending.</li><li><strong>Oil and gas.</strong> In its latest production report, Petrobras rated its performance as “<a href="">very good</a>, considering the challenging scenario imposed by the pandemic.” Oil production was up 5.4 percent in Q3 2020. Year-to-date figures of oil extracted from deepwater pre-salt reserves show 32 percent growth from the same period in 2019.

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