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Chile: the political pendulum swings again

Chile has again provided an electoral surprise, with the pendulum this time swinging away from the left; the result gives the right hegemony in the convention and veto power. Faced with the prospect of radical change, the Chilean electorate seems willing to choose to remain largely faithful to its decades-old characteristics. The drafting of a new constitution, now within a framework that limits this radical change, begins with a republican majority and, by the end of this year, we will know if a new text has been agreed.

The stridency of the earlier failed process seems to have been left behind and the attention of Chileans is now focused on countering increased security concerns and unregulated immigration. President Boric believes that the only route to relative success lies in his ability to build broad agreements on security, pension and health policies.

From an international perspective, Chile seems to be enjoying greater stability than its neighbours. Bolivia and Argentina are suffering from high inflation and, in the case of the latter, there is even potential for hyper-inflation. Peruvians, meanwhile, are having to contend with unregulated immigration and a political crisis which has not calmed down in the wake of the government of former President Pedro Castillo.

Chile is still making efforts to control inflation, with the central bank maintaining a high interest rate. If populist pension withdrawal proposals prove unsuccessful, as forecasters say, inflation should be controlled in the short to medium term, However, two consecutive quarters with the monthly IMACEC economic activity index in negative numbers have left the entire political class and economic experts discussing whether or not Chile is entering a recession. The contraction in mining and the decline in the country’s commercial activity are mainly responsible for these red figures.

Foreign direct investment in 2022 reached nearly US$ 21 billion for an increase of 31% over 2021. This total was 50% higher than the average for the last five years and 46% ahead of the historical average for the period 2003 to 2022.

With regard to recycling-related developments, the first stage of the extended producer responsibility (EPR) law regulating end-of-life tyres came into effect on January 20 this year. There is great tension here as the government has yet to approve the management system so that tyre producers can meet the goals set by 2023. This unfortunate lack of co-ordination is mainly affecting tyre recycling companies which, as of this year, have seen a drastic decrease in collection volumes that could certainly lead to bankruptcy for some of them. This shows that recycling companies should form an integral part of the management systems since they are the key to the success of the EPR law.

Progress is meanwhile continuing towards the implementation this September of the decree that sets goals for the packaging sector. Although the goals for the initial years are not ambitious, the EPR law should increase recycling rates not only by imposing certain targets but also by modifying the behaviour of producers, who will be responsible for adapting their policies and increasing the ability to recycle the products they place on the market. 

Chile’s success in terms of its politics, its economy and its recycling performance will depend on the country’s ability to forge effective public-private partnerships. After a number of turbulent years, Chileans are looking to the future with a mixture of optimism and moderation.