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Remarks: Michelle Bachelet, President of Chile

September 23, 2009





September 23, 2009


SUSAN SEGAL:  Good evening, and welcome to the Americas Society and Council of the Americas.  Tonight we are extremely honored to present her Excellency, Michelle Bachelet, president of the Republic of Chile, with the Americas Society Gold Insigne.  I would like to welcome the president and everyone joining us tonight and particularly recognize the Chilean minister of foreign relations, Mariano Fernandez; Ambassador Geraldo Muñoz; U.S. ambassador to Chile, Paul Simons; OAS Secretary General Jose Miguel Insulza; and Secretary General of the Ibero-American Organization, Enrique Iglesias.  We also welcome Mr. Iñaki Urdangarín and other members of the Chilean delegation and the many distinguished guests that I may not have mentioned already.  (Laughter.)

The Gold Insigne being presented tonight is the highest award of the Americas Society.  It is presented only to democratically elected heads of state from the Western Hemisphere who have made outstanding contributions to their own country, the region and society as a whole. 

President Bachelet, you are the ideal recipient of this award.  Since taking office in 2008, you have demonstrated extraordinary leadership, combining economic growth and social development, and proving that growth and social progress can go hand in hand.  You have made an enormous difference in the lives of retirees, children and women throughout the country.

Your efforts have incorporated segments of society into the pension system so that they can enjoy a decent and respectful retirement, financing it through existing savings.  Pre-school children now have access to education with the additional benefit that more women can enter the work force.  This has improved the lives and futures of children, women and entire families who now see more and better opportunities for the future. 

And with her steadfast leadership and commitment to the right economic policies, she has done all of this.  President Bachelet has steered Chile through the recent global economic crisis.  She is one of a handful of leaders – maybe the only leader – in the world to actually improve her overall approval ratings during the recession, which today stand at over 70 percent. 

President Bachelet, you have demonstrated to Latin America and the world that you can have economic growth, prosperity and a social conscience – a very important message, particularly in today’s world.

In her quiet but influential way, she has also exerted hemispheric influence and leadership, helping to guide Latin America to a more stable and promising future.  And of course, during her administration, Chile continues to stand as an example to the world of why protectionism doesn’t work and why free trade does, demonstrating that trade brings again growth, prosperity and jobs as well as a better life to all.  President Bachelet’s legacy will be one of extraordinary regional leadership in a time of crisis and achievement of sound economic management and social gains at home. 

Under her leadership, all Chileans can look to a brighter future.  President Bachelet, it is my great honor to award to you this evening the Americas Society Gold Insigne Award in what is likely to be your last visit to New York as president.  It is also my great honor to note that tonight marks only the second time in our history that a woman will receive the Gold Insigne and for me as the first woman to be the president and CEO of Americas Society in our more than 45-year history, that is also a very special thing for me.  It is also incredibly special because I’ve known you for a long time.

So, again, this evening, it is our great honor and pleasure to award you, President Bachelet, the Gold Insigne for all of your many achievements and your accomplishments.  And we give you this with all of our hearts and all of our sincerity.  Congratulations.  If you could please come up.  (Applause.)

PRESIDENT MICHELLE BACHELET:  Well, first of all, I wish to express my gratitude for the Gold Insigne Award that this council has conferred upon me.  It is a great honor for me and I receive it with emotion on behalf of all the millions of Chileans, men and women who have struggled so hard to recover and then to consolidate a democracy that is taking enormous strides towards development.  In addition, I wish to thank you for that special friendship that you have demonstrated towards me. 

This is the second time that the Council of the Americas has received me during my term in office to talk about bilateral relations, but also to share thoughts regarding the current international economic juncture and the future of the region, of our region. 

Furthermore, I come here as president of a country, that as President Obama said during the meeting we held last June 23rd at the White House, is a partner country of the United States in Latin America; partners in building together a more democratic and more prosperous, as well as more socially just and environmentally sustainable, world and hemisphere; partners in truly contributing to the success of the proposal made by President Obama to the region at the Summit of the Americas last April to forge a new relationship with Latin America; and moreover, partners because after the signing of the free trade agreement in 2003, bilateral relations between Chile and the United States have now entered into a maturity stage. 

The United States remained our primary trading partner and the main foreign investor in Chile even at this present time of crisis.  In view of this, on this occasion, I would like to invite you to maintain and deepen this relationship even more and point out that although Chile has suffered the effects of the crisis, our country will come out of it earlier and stronger than ever thus consolidating its place among the soundest emerging economies in the world. 

At midyear, the 2009 World Competitiveness Yearbook, issued by the International Institute for Management Development, based in Switzerland, stated that Chile is one of the 15 best-prepared countries worldwide to confront the international crisis and to overcome it faster.  And last week the IMF acknowledged this strength and forecasted that in 2009 the country will grow at a rate of minus 0.7 percent, and for 2010 the growth rate is expected to reach 3.6 percent.  In Chile, our central bank has just forecasted negative growth this year between minus 2 and minus 1.5 percent, and positive growth ranging from 4.5 percent to 5.5 percent for 2010. 

Our strength to tackle the crisis is closely linked with the soundness of our financial system, a healthy and well-capitalized system, thanks to the stringent regulations that the country established as a result of lessons learned during the crisis – we had a very important crisis, financial crisis, at the ’80s. 

Likewise, our strength lies in our determination to consolidate a democracy on the basis of two pillars:  growth and equality.  Growth is possible thanks to fiscal discipline.  This has led us to institutionalize a countercyclical macroeconomic policy that enables us to save over $22 billion in sovereign funds which in turn allow us to launch this in this year of crisis, a fiscal stimulus plan equivalent to 2.9 percent of the gross domestic product, one of the five largest plans in the world if you make the comparison to the GDP in order to boost the economy, as well as to protect and promote employment.

 In the years ahead, our goal is an ambitious one.  Chile will emerge from this crisis with renewed strength to continue its path towards development.  Just as some Southeast Asian and European emerging economies did in recent years, Chile is in a position to become a developed economy over the course of one generation, and it is determined to do so. 

We are creating a political system that is more inclusive, participatory and transparent.  We have implemented a social protection system capable of providing security that our people need in a globalized world.  We are pursuing a national innovation strategy that will allow us to leapfrog in terms of our competitiveness.  We have signed a number of trade agreements – I think we are the country that has signed the most trade agreements in the world – I think it’s with 56 or 57 countries.  And that permits us to have access to a market comprised of four billion people. 

We have managed to become one of the most secure and efficient business platforms in and for Latin America, and we play an increasingly important role as a bridge between Asia-Pacific and Latin America. 

Dear friends, our meeting is taking place at the crucial moment, both at the world and regional levels, marked by the unfolding international economic crisis and the challenges of democratic consolidation in Latin America.  And the consequences of this financial crisis, the most severe downturn in the last 60 years, are very serious.  Only recently, and thanks to the largest state mobilization ever, we have started to see the light at the end of the tunnel around the world. 

We believe that it is necessary to ask ourselves, what are the lessons learned from this crisis?  The most important one is that the crisis has not only been economic, but essentially, what we call a political crisis as well.  It has come about as a result of a prolonged period of absence of international political leadership, of a lack of will to act upon the numerous problems that began to build up as globalization became more widespread – and that because they were not tackled in due time, simply exploded as was the case with the burst of the mortgage bubble. 

Consequently, the global economic crisis that has hit the world since 2008 has become a dramatic example of the cost of pressuring the globalization process without rules, of relying on the belief that globalization could be managed though a laissez-faire approach, and that in the end the market could replace politics.  If we fail to learn this lesson mankind will face much more serious problems in the future, because many more bubbles will burst, the best example of that being global warming and climate change.  Managing this new agenda of global problems has become the main challenge for the international community. 

In concrete terms, this crisis poses an urgent demand to build a new global political and social contract based on a new political paradigm in which the focal point should be effective collective actions by strong states capable of generating major global agreements and regulations to ensure effective governance in the 21st century.  And that means only one thing:  We have to take multilateralism seriously.  We cannot continue doing things the way we used to do them prior to the crisis.  I’ve said earlier that business as usual is not enough anymore. 

Hence, we ought to accomplish the tasks that the G-20, for example, is committed to performing, which is showing us a very clear road towards changing the way in which the world should be ruled.  We ought to coordinate fiscal policies and prevent imbalances.  We ought to strengthen our rules in order to prevent another global financial crisis.  We ought to reform multilateral institutions.

I was remembering earlier the Asian crisis. When we had the Asian crisis everybody said “we cannot do business as usual; we have to reform lots of institutions.”  But nothing happened, and 10 years later we are repeating the same thing.  This is not acceptable anymore; we have to make the changes that we need to make.

One of the areas in which this conflict between the paradigm of deregulation and the need to formulate the necessary rules – I’m not talking about overruling, I’m talking about rules that seem most necessary– is most evident is in democratic construction.  During the ’80s and the ’90s optimism became widespread.  There were many who thought that democracy in the world was here to stay; however, many democracies have been unable to bear the fruits that people expected from them and now face serious problems.

So apart from suffering the effects of an economic recession, the world is also being confronted with what some have labeled as democratic recession.  And Latin America has not been spared from this global phenomenon.  Our region is going through the longest democratic experience in its history; however, during these last 25 years, we have witnessed the interruption of close to 20 legitimately elected governments.

Nevertheless, until the crisis in Honduras, all these other interruptions had not taken the form a traditional coup d’état, as those that occurred during the Cold War period, whereby democratic regimes were put to an end in order to impose authoritarian ones.  But rather they have been political crises in which presidents have been overthrown but a democratic regime has been maintained.

Fortunately, the way in which the international community reacts at present in terms of defending democracy and seeking a solution through dialogue when faced with a political crisis is better now compared to 25 years ago.  This is what UNASUR did.  UNASUR – perhaps not everybody knows what it is – is the organization of the 12 South American countries.  And I was the chair until one and-a-half months ago. 

We did a lot of work and succeeded in preventing a democratic breakdown during 2008, during the crisis in Bolivia.  And the Organization of American States is doing likewise after the coup d’état in Honduras, with the mediation of the president of Costa Rica, Óscar Arias, who proposed the San José agreement, which should be endorsed by all at this moment.  However, democratic consolidation in Latin America demands far more than that.

In the first place, it is necessary to understand that democratic rules are totally, completely and absolutely indispensable, but they are not enough.  We must pay attention to what our people think, how do they experience democracy, and what are the fair demands that they claim from it, because just like Abraham Lincoln, they never forget what others tend to forget:  that democracy is the people’s government, although it must also be by and for the people.

And of course, I have to make an additional comment:  A democracy has to deliver.  If a democracy does not deliver, why should people believe that democracy is the best system in the world?  The foregoing here just has to truly consolidate institutions and the rule of law.  Free and competitive elections, civil liberties and the respect for human rights – there is no doubt about it – are the essence of democracy.  The rights of each individual must be guaranteed, and the authority freely elected into power.  The freedom of conscience, worship, expression and association need to be respected as well.

Let us bear in mind that although throughout the whole Latin American continent states respect civil rights and individual liberties, in many places people simply cannot exercise them due to the coercive action of organized crime.  Therefore, if we intend to consolidate and achieve a more perfect democracy in the region, we must also defeat organized crime, corruption, inefficient legal systems and police brutality.

Democracy is a system of liberties.  Consequently, let us strengthen those liberties.  And once we have managed to secure a representative platform, let us move forward towards creative and effective means to achieve citizen participation.  And we do not fear participation, even if this could imply less power for the state, which has been traditionally very powerful in Latin America.  Let us not be afraid to yield power, because in fact we are not yielding it.  We are giving it back.  Let us do it because public apathy may end up eroding the legitimacy of our democracy because citizens’ input and referendums lead to more efficient public policy.  And in our case we have developed a lot of specific programs which citizens are part of, much like stakeholders.  And really those kinds of polices have been really effective and really legitimized. 

Let us make sure that democracy provides citizens with basic social benefits.  Let us keep in mind that democracy is also government for the people.  This is particularly true in the case of Latin America because in the ’80s and the ’90s the social dimension was not given the same priority as political democratization and economic modernization, thus eroding the legitimacy of the democracies that we’ve struggled so hard to establish.

During this period of time the region improved its macroeconomic management, enjoying a prolonged, 6-year period of economic growth.  Thanks to this, between 2002 and 2008 37 million Latin Americans left poverty behind.  However, such progress has not only been insufficient, but has been halted, first due to the food crisis and then as a result of the international economic crisis that sparked. All of which can lead to a greater weakening of democracy in the region.

I’m very concerned about social collapse after economic collapse; this can lead to political unrest as well.  And we still believe the G-20 is not taking this into consideration as it should.  So I’ve been doing a lot of lobbying with people who are sit in the G-20, my colleagues, so that we should put more emphasis and prioritize this issue.

Let me share with you some recent figures that are alarming:  The number of people who suffer from hunger in Latin America and the Caribbean rose from 52 to 56 million between 2006 and 2008.  And it is expected that this year between 2.8 and 3.9 million people will join the ranks of the urban unemployment, who added up to 15.9 million in 2008.  In view of this, we, the citizens of Latin America, are presently fighting and doing our best efforts to attain a meaningful democracy, a democracy that will benefit the majority of citizens rather than one that favors only a few minorities.

It is for this reason that it is imperative for us to make progress towards a society that promotes liberties as well as equal rights and equal opportunities.  The idea is that the state should acknowledge and guarantee the social rights of individuals, leaving behind the state welfare-type assistance to the poorest and moving forward towards a more supportive and universal way of thinking particular to a modern welfare state.

But the above demands a rigorous fiscal and political discipline.  It imposes an obligation to save during, let’s say fat years, so as to have enough when lean years come.  It demands guaranteeing social rights all the time rather than having to cut back benefits whenever the conditions – as is the case today – are not the best.  And this is not an easy task.  And even more so in times of crisis, the challenges are huge, although not insurmountable.  There are several countries in our region that have demonstrated that we can succeed.

And Chile has done so.  We reduced poverty rates from 40 to 13.7 percent between 1990 and 2006, and this is because we implemented a countercyclical policy.  And we saved when the price of copper was high, so we see how this year we could increase social expenditure to 7.8 percent.  Remember, we’re going to grow about minus 0.7 or minus 1.5.  We could increase our social expenditure precisely at the time when we were being hit the hardest by the crisis and precisely when our people needed it the most.

This is what I tell you – you can be popular without being a populist, because we did what was right.  At that time it was not understood, but now everybody believes it was a great, great decision.

It is possible to ensure minimum well-being and opportunities for our people so that democracy may continue being alive and consolidate on our continent.  We can demonstrate to our citizens that democracy can change their material conditions during each of their lifetimes.  Perhaps this will not happen overnight, but rather in a gradual, although perceptible manner – and in any case, with enough intensity to keep our hopes in democracy alive.

Dear friends, members of the Americas Society, Council of the Americas, I wish to conclude by urging you to be optimistic regarding the future of Latin America and also vis-à-vis  the relationship between our region and the United States.  It is true that at present there are divergent political and ideological projects underway in the region, that democracy is not yet fully consolidated, that social challenges are enormous and that it has been hit hard by the economic crisis, putting an end to a long period of growth.

In spite of all of this, it is also true that the region will soon come out of the crisis, that good macroeconomic management is expected to be maintained, and that, furthermore, there is an increasing awareness that it is advisable to apply countercyclical policies and that, above all things, but with a few exceptions, this whole process is being led by democratically elected governments.

It is for this reason that as president of Chile I have underscored in all hemispheric regional and subregional fora how important it is for us to be able to have dialogue and understanding as well as have the formulation of agreements, whenever feasible, prevail over polarization.

I am fully convinced that this path is not only desirable, but absolutely feasible and that the large majority of the inhabitants of our nations, in the year in which we are starting to commemorate our bicentennial of our independence, wish to take together on the road to understanding, cooperation and integration.

But the same road, Walt Whitman suggested in his Calamus poems back in 1860, and I quote, “Come,” end of quote – no, that’s not the whole quote; don’t worry.  (Laughter.)  “Come,” said Whitman, with his then misunderstood humanity, and I quote again, “I will make the continent indissoluble.”  So then let’s make this continent indissoluble.  I’m certain that if we work together, guided by the spirits, not only will we be resuming the road to prosperity that we have been following until the onset of the crisis, but, in addition, we will be able to materialize the promise made by President Obama of forging a new relationship with Latin America.

Thank you very much.  (Applause.)

MS. SEGAL:  The president has kindly agreed to take some questions.  So just one or two.  So if anybody has a question on this incredibly festive evening…

PRES. BACHELET:  It’s not mandatory.  (Laughter.)  It was crystal clear, huh?

MS. SEGAL:  We have one question over here.

Q:  Madame President, what would you say is your greatest accomplishment of your tenure as president?

PRES. BACHELET:  Oh, my proudest accomplishment.  Well, I am proud of many accomplishments.  Probably the proudest is that we have shown that it is possible, as Susan said, to grow but also to give better conditions to the lives of people – I mean, to show that it’s not necessary to make a tradeoff between economic growth and the social protection of equal opportunities. 

That looks very general but it can be shown in very specific different initiatives and sectors where we have been responsible economically – I would say a country that is respected, that maintains the rule of law, that can be a reliable partner.  But, on the other hand, we have been working a lot in order to give our people what they need, especially in the moment they need it the most.

And I could tell you a lot of things about children, women, pensions and so on, but I would try to summarize it by saying that this approach, this option that we made since we recovered democracy – of course, other governments have shown the same– but in our government we have also been able to show that it is possible for a country to give options, progress, economic growth, development and equal opportunities for everyone.

Q:  Thank you.  Ivette Feliciano from World Focus.  To save the money we made from copper, the copper industry, for a later date, how was that decision met at the time and are there differing opinions as to how that money should be used today?

PRES. BACHELET:  Well, as you remember, copper was very high.  The price of copper was so high.  And we still – when we analyzed the budget every year, we had a very expensive budget because we had enough money, we had a lot of needs, we were determined to make pension system reforms and that was very costly.  And we did not need to make any tax reform because we had the money.

So we thought – we knew the experience of the Norwegian fund from oil, that they put these sovereign funds away for the future.  And we were determined to have this pension system reform that would cost, in the first step, a bit, but then, afterwards, it would cost a lot.

So we decided not to expand everything in the budget every year, but to assure that all of the benefits, social benefits, that the people will be receiving could be maintained in the future.  We have estimations that in 2015, that maybe we could come in the millions in Chile where the passive sector will be bigger than the active sector because we are living so much; we have a very high expectancy of life.

It’s a median of like 78, but women are living like 82, 83; men are improving, too, so don’t be sad – (laughter) – the men in the room.  And so we decided to make – it was a tough choice because many – it was not understood by my friends – (chuckles) – and also by my political adversaries.  And they thought it was a very bad decision because, of course, we were more popular if we used all that money in the contingency.

So we did that because we thought that we had to be responsible, that if we were increasing the benefit, the social benefit, I mean, benefits have to be sustainable financially otherwise it’s not reasonable and it’s not responsible.

So we made that decision and we were very strong; we – ¿cómo se dice “soportar”? – endured, we managed with all the pressures that you can imagine.  But we made that decision.  And afterwards, when the crisis came, everybody understood that it was a wise decision, you know?  So nobody is discussing it anymore.  (Laughter.)

But I have to tell you that we sent a law, a bill, and it was a law that these funds are by law.  I mean, we didn’t want to be – you know, the decision of one government or another.  We think this permits us to be responsible, to have a sound economy and to have – and to assure to the people that this is what we’re saying, that is so important:  growth and social protection; it is true.

So that is how we made it.  It wasn’t an easy decision, but it was – I mean, I was convinced of that.  So the pressure didn’t worry me because I thought it was a way of looking at it.  And maybe because in our country many political forces and of course the coalition that I lead, we are very serious.  I mean, we think in the long term, not only in the short term.  Of course everybody wants to win elections.  In that sense, fortunately, we don’t have reelections.  So presidents don’t have to think always in its own reelection.

But I think this is good because we think in the long term – and if you are responsible, it will work and it has worked very well.  So that’s – that’s why we’re promoting countercyclical policies now.

MS. SEGAL:  With that, I want to thank President Bachelet.  I want to congratulate President Bachelet and I want to invite Bill Rhodes, our chairman, to come and give a toast to Chile and to Michelle Bachelet, president of Chile and recipient of this year’s Gold Insigne.  (Applause.)

PRES. BACHELET:  Good to see you.  How are you?  Wow – the Spanish way, the Spanish way.  (Laughter.)

WILLIAM RHODES:  Primero quiero pedir perdón de la presidenta por llegar tarde.  Pero tuve que caminar casi hasta 53, hasta acá porque la policía han cerrado Park Avenue.  (Laughter.)  So it was a long walk, but I was in constant communication here to see who was going to present the medal.  But, unfortunately, I could not be here to do it.  But I wanted to give a toast and I wanted to tell two very quick stories that relate to the president.

One is I think, as we all know, Chile – and perhaps the president had mentioned this in her speech – had done an incredible job by taking the proceeds of the high price of copper and putting it away.  And there was a lot of opposition.  And people criticized the president tremendously for doing it and the minister of finance, Minister Velasco, who we have had here as our guest on many occasions.

But he told me when I introduced him on el Día de Chile acá hace trés meses, he told me, he said, Bill, I could only do this because I had the 110-percent support of President Bachelet – because people in the cabinet didn’t agree; they wanted it to use for all sorts of things.  But the presidenta said to me, you have my full support.  And I was only able to do that because of her support.

And he is now among finance minister heroes all over the world because Chile put that money away and when the great crisis came that we’ve seen over the last 18 months, Chile was there and ready.  And very few other countries were – and that was only because of you, President Bachelet.  And he gave you full credit for that in front of 700, 800 people.

And so I think that says something about her courage, of her ability to take tough decisions when everyone in her party, virtually – the labor unions were demonstrating; everybody, those who supported her for election – and she had the courage to do the right thing.  That’s one.

Second of all, I had a call two days ago from my former chief of staff when I lived in Venezuela; Susan knows him.  And he is a member of the opposition in Chile.  His father was ambassador to the United States under Alessandri.  And he said – I told him that we were going to be honoring you today.  And what he said, he said, you know, Bill, I’ve an avid member of the opposition, but this is a great lady and she has done great things for Chile.  And please let her know that many of us in the opposition really respect what she has done, her courage and her ability.  And those are the two stories I wanted to tell this group about you, Presidenta. 

So with that, I’d like to give a toast to a great president of Chile and to Chile as a great friend of the United States.

PRES. BACHELET:  Thank you.

MR. RHODES:  Salud!

(Chorus of, “Salud!”)