Chile's Bachelet set to return to power, but obstacles await

By Rosalba O'Brien and Antonio De la Jara RANCAGUA, Chile (Reuters) - Michelle Bachelet is a safe bet to return to power in Chile's presidential election, but she is now promoting a more ambitious program of leftist reforms and will need every ounce of her political skill to push them through. A physician by training and a moderate socialist by conviction, Bachelet has unfinished business from her first term in 2006-2010. She wants to raise corporate taxes to pay for an education overhaul and rip up Chile's dictatorship-era constitution as well as the electoral system. Bachelet, the only woman ever to lead Chile, has between 30 and 40 percent support in polls, well ahead of her nearest opponent, Evelyn Matthei of the rightist Alianza coalition. Matthei is polling between 12 and 23 percent, hampered by links with the dictatorship of General Augusto Pinochet, who took power in a 1973 military coup and led Chile for 17 years. Memories of the coup and the violent repression that followed still resound 40 years later. The presence of Matthei's father in Pinochet's junta, as well as her own support for Pinochet in a 1988 plebiscite on his continued rule, have tainted her in the minds of many Chileans. Seven other candidates jostling in the first round on November17 will likely push the election to a run-off in December, and Bachelet should comfortably win, polls suggest. She could then be hampered, however, by an electoral system that gives heavy weighting to the second-placed party, so she needs to win big, or face four years of tough bargaining with the right. While the other candidates scrap for second place, Bachelet has toured the South American country with a simple message: don't just vote for me, vote for my coalition. "I ask you to mobilize, to get people to vote for the coalition, to vote for Congress because I need a Congress that will take the plunge on the changes that Chile needs," she said last week in Rancagua, a town in central Chile that could be a symbol for the export-led economy, bumping up as it does against a large copper mine and vineyards. Bachelet's pledges to address social inequalities by increasing corporate taxes, closing tax loopholes, spending more on healthcare and reforming an education system that favours those who can pay and has been the focus of sometimes violent student protests. She also wants to help design a new constitution that she says would be "born of democracy." It would be drawn up after debate but Bachelet wants to reduce the high number of votes needed to pass laws, introduce a new electoral system that is more representative of voting patterns, and lure more women into politics. Bachelet's supporters say she is in a stronger position now than in her first term. Some in the Alianza bloc's more moderate Renovacion Nacional arm feel the voting system has put them at a disadvantage, so they may be ready to support electoral reform. And Bachelet herself has matured as a leader. "She feels much more secure in what she's doing," said Sergio Bitar, who helped run her 2005 election campaign and served as one of her ministers. "Now you see somebody who's a leader, who knows where she's heading, who's responding to what people are asking, telling people where to go, listening to everyone - a much stronger personality nationally and internationally." Still, to change the constitution under the current system would require the backing of two-thirds of Congress. Although the entire lower house and 20 of the 38 seats in the Senate are also up for grabs in November, Bachelet's coalition would need a substantial swing to win a two-thirds majority and that is seen as unlikely. Even with a convincing win in the presidential vote, Bachelet would have to keep in check her own Nueva Mayoria coalition, which ranges from moderate leftists to communists who were brought in for the first time in the hope that their links with protesters and community groups will help keep the peace. "I think it's going to be very difficult," said political scientist and columnist Robert Funk. "She's going to have a great challenge to manage a coalition which is increasingly unmanageable, the economy is going to be in rough shape, the social movements are not going to go away." Investors are also keen for assurances that the business-friendly model of recent years, including in Bachelet's first term, will not be abandoned, especially as investment in the crucial mining industry is slowing and dragging economic growth down with it. The central bank forecasts the economy will grow by between 4 and 4.5 percent in 2013, compared to 5.6 percent last year. EMPATHY A poll by the Universidad Diego Portales last week showed that some 80 percent of Chileans said they do not identify with any political party, the lowest since the survey began in 2005. They do identify with the 62-year-old Bachelet, however. "She has a marked social empathy. She is tuned into people, that is something that other politicians don't have," said political analyst Guillermo Holzmann. Bachelet's father was an air force general who remained loyal to socialist President Salvador Allende after he was elected in 1970. When Allende was toppled from power in Pinochet's coup, her father was imprisoned and tortured. He died in prison. Michelle Bachelet and her mother were also tortured and later forced into exile. Divorced, with two children from her marriage and a third from a later relationship, Bachelet is an avowed feminist who in her first term appointed a cabinet made up exactly equally of women and men. Her background is a strong selling point for her. "They don't just see her, they don't just see her government, they know her story," said Funk. "If you compare her popularity to that of her government, hers was always much, much greater." Just before Bachelet left office in January 2010, she had an 83 percent approval rating, according to pollsters Adimark, despite early mistakes that included the messy implementation of a new transport network in Santiago. Barred constitutionally from ruling for two consecutive terms, Bachelet could not contest the 2009 election and her coalition lost to Alianza and its candidate, Sebastian Pinera. In the last weeks of her administration, Bachelet came under criticism for her handling of a devastating earthquake and tsunami that killed 551 people. It tarnished her legacy, but didn't heavily impact her long-term popularity. She has been the runaway favourite to win this election since before she even declared that she would run. Pinera, a billionaire whose stand-offish manner contrasts with Bachelet's common touch, has been an unpopular president and faced a surge in popular discontent with many of the poor feeling they have not benefited from Chile's copper riches. AMBITIOUS REFORMS If elected, Bachelet will join Brazil's Dilma Rousseff and Argentina's Cristina Fernandez to give a distinctly female face to political leadership in traditionally machista South America. Like Fernandez and Rousseff, Bachelet was politicised in her youth under an oppressive military dictatorship. While Fernandez has taken a populist, hard-left tack in power, both Rousseff and Bachelet follow more pragmatic, business-friendly policies. Improved public education has become a major demand in both Brazil and Chile, with students regularly taking to the streets, and Bachelet is focusing heavily on education reform as a way of tackling inequality. "I think today the conditions are right to do new things," Bachelet told the local woman's magazine Cosas after her return to Chile from New York this year, where she headed the United Nations body dedicated to gender equality, U.N. Women. "Chile needs structural reforms, and there is more political and social force to do it. It's not that I saw the light in New York. On much of this, I already had a clear conviction in the past. But today the conditions for progress are better." When she took office in 2006, Bachelet was seen as politically naive and she struggled to make decisions. She developed her political skills throughout her presidency and people in her circle say she is now much more savvy. "I think she has internalized now that a country's problems, carrying out deep reforms or important changes that the people want, needs dialogue with the leaders directly," said Holzmann. "She needs to talk to the opposition leaders and get a face-to-face dialogue going, which will end up in the kind of political agreements that were the essential element she did not have clear in her first government." Perhaps mindful of where she will need future allies, Bachelet has largely refrained from joining the other candidates in mudslinging during the campaign. She will need all her political talent to persuade politicians from left and right to back her, and analysts say she will probably have to water down some proposals. It is not clear how far Alianza leaders will be willing to support her. They acknowledge that the education system needs to be shaken up but they want less wide-reaching reforms, paid for through growth rather than taxes. They argue that Chile's successful economic model should not be tampered with and want action to secure the energy supply for its mining industry, a thorny topic on which Bachelet has said little. Investors seem largely resigned to the fact that Bachelet will win and taxes will rise. "I think the market has priced it in," said Santander Chile head Claudio Melandri. He said Chile, like Brazil, has a dearth of qualified professionals and that better education and stronger training programs would be good for the country. "Putting up taxes without a clear idea of where the money is going worries me more, but if it's a good project for education there's no problem," he said. (Additional reporting by Anthony Esposito.; Editing by Kieran Murray and Christopher Wilson)