Chile’s new president Gabriel Boric (“Boric”) recently affirmed support for neighbouring Argentina’s territorial claims over the Falklands, a decades-long source of bilateral tension with the UK. What has surprised diplomatic circles is that Boric mentioned these claims at a time when it would have been politically prudent to remain shtum. London and Santiago share close commercial and political relations. A sign of Boric’s inexperience perhaps? According to our sources, a meaningful foreign policy vision remains murky.
An official from the Chilean Ministry of Foreign Affairs explained, “It is unlikely that Boric’s statements will be taken very seriously by the British Government or that they will markedly influence the course of bilateral relations between the two countries.”
“It is unlikely that Boric’s statements will be taken very seriously by the British Government or that they will markedly influence the course of bilateral relations between the two countries.”
An official from the Chilean Ministry of Foreign Affairs
Much more consequential than symbolic statements on isolated islands would be regulatory or constitutional changes that may affect the health of British investments in Chile or the smooth-running of Chile’s thus far region-leading financial services sector. On these issues, London will be paying much closer attention to the musings of the leftist constitutional convention, due to finalise constitutional recommendations in the coming weeks.
A lack of policy clarity from Chile has meant that many foreign governments have been “… reduced to showing rather symbolic support and without a great deal of enthusiasm,” explains a businessperson with commercial interests in Chile, Argentina and the UK.
This attitude reflects a broader malaise with Boric a month into his presidency, now facing plummeting approval ratings. According to a member of a Chilean business association, weeks after taking office, “…the administration does not seem to have a clear roadmap or an identifiable direction, especially considering the repeated discrepancies within the government’s team and the contradictory positions that the president himself has assumed.”
“…the administration does not seem to have a clear roadmap or an identifiable direction, especially considering the repeated discrepancies within the government’s team and the contradictory positions that the president himself has assumed.”
A member of a Chilean business association, Chile
Realistically, mounting domestic challenges are likely to side-line the more ambitious elements of Boric’s foreign policy agenda. The government is struggling to tame the highest inflation rate of the last 30 years. It also faces acute internal and external conflicts, from anti-migration protests in the far north to disgruntled indigenous communities in the far south, that have made it difficult for the administration to clearly establish a foreign policy roadmap.
Part of these difficulties come from an increasingly uncomfortable alliance between the Communist Party, the Broad Front and the Socialist Party. This alliance has failed to translate into common goals or consistent policy proposals.
An imminent challenge for the new administration is the processing of what has been called “the fifth withdrawal” of savings by savers from their pension funds which will sharply exacerbate fiscal challenges. The problem for Boric is that his alliance enthusiastically supported the four previous discussions of pension fund withdrawals during the pandemic. Three withdrawals of 10% of the funds from each saver, with certain limitations, were approved during the previous government of President Sebastián Piñera. Further withdrawals will put huge pressure on the treasury and central bank and could sharpen political opposition.
Chile’s influence on the international agenda during the 2022-2026 period is likely to be limited considering the internal difficulties that will occupy the attention and energy of the new administration.