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Chile to Hold Referendum on Rewriting Pinochet-Era Constitution

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Chile’s 40-year-old, dictatorship-era constitution has divided citizens into those who credit the charter with laying the foundation for robust economic growth and those who criticize it for undercutting efforts to improve social conditions.

Now, voters will decide whether to change their Magna Carta. On Sunday, Chile holds a referendum on whether to start the two-year process of writing a new constitution, which President Sebastián Piñera hopes will calm the country and restore the stability shattered by protests that began last year over discontent with the status quo.

At stake are the fundamental rules governing the nation of 18 million people and the future of one of Latin America’s most successful economies that is at its most tumultuous period since its return to democracy in 1990. Public trust in Chile’s institutions—from political parties to the courts—has collapsed amid violent clashes between police and protesters that started last October and picked up again just this past week. The global coronavirus pandemic has further battered Chile’s economy.

A church was set on fire during demonstrations in Santiago earlier in October.

A church was set on fire during demonstrations in Santiago earlier in October.

Photo: Pablo Rojas Madariaga/SOPA Images/Zuma Press

“Our democratic institutions are disgraced and discredited like never before,” said Andrés Velasco, a former Chilean finance minister. “I see this process almost like a new beginning, like a second birth.”

Mr. Piñera, a conservative billionaire, has said the country needs a constitution that unites Chileans while maintaining market protections, whether by writing a new one or modifying the current charter. Members of his Chile Vamos coalition are split on backing a new constitution.

Those pressing for a new constitution want a document that improves democratic accountability, provides a raft of social rights and increases the state’s role in the economy.

“We need a constitution that is legitimate and that the majority of the people in Chile feel a part of,” said Gabriel Boric, a left-wing congressman.

Business leaders and conservative politicians say the charter’s strong guarantee of property rights and rule of law have helped Chile’s economy take off and generated prosperity for millions. They worry the political left will stack the document with a costly shopping list of benefits that will force the state to overspend, a trend in other South American countries.

Latin America has a long history of rewriting constitutions, saddling governments with onerous costs in tomes that run as big as 60,000 words, compared with the original four-page U.S. constitution. Charters in Venezuela, Bolivia and Ecuador guarantee everything from housing, social security and technological research to cultural self-identification. Brazil’s 1988 constitution earmarks 90% of the federal budget for mandatory expenses such as pensions.

Supporters of Chile’s referendum say they don’t want to model their constitution on any other country. But some political analysts say a new charter risks becoming a hefty document full of unfunded mandates to meet increased social demands during the sharp economic downturn and an election year.

“There exists a very high risk of greater fiscal spending,” Michèle Labbé, an economist in Santiago with consulting firm Dominus Capital, said of a new charter. “It will have a direct economic impact with enormous uncertainty.”

If Sunday’s referendum is approved, as polls show, the new constitution will be written by either a newly elected constituent assembly or a body made up of current members of Congress and newly elected delegates. Women will make up half of the newly elected delegates in whatever body is chosen.

Pollster Cadem said recently that 93% of Chileans want a new constitution to guarantee free education and health care, addressing key grievances of protesters, who have railed against private schools and hospitals. More than 70% want the political power that is now concentrated in the president’s office, which has control over the budget, to be split between the head of state and Congress.

Half of Chileans think the central bank should remain autonomous, a constitutional measure that economists say has allowed Chile to avoid rampant inflation as in neighboring Argentina. Cadem says 85% of those polled want to keep protections for private property in the charter, which was written in 1980 and implemented the following year.

There are also demands to recognize the rights of the indigenous Mapuche, a historically marginalized community that has a long-running and often violent land dispute with the forestry industry in southern Chile.

Thousands of people gathered near Santiago’s Plaza Italia on Oct. 18 to mark the first anniversary of protests.

Thousands of people gathered near Santiago’s Plaza Italia on Oct. 18 to mark the first anniversary of protests.

Photo: Felipe Vargas Figueroa/Zuma Press

The current battle over the constitution has its roots in Gen. Augusto Pinochet’s dictatorship, which seized power from Marxist President Salvador Allende in 1973. Distrustful of elections after Mr. Allende’s rise, the Pinochet government convened lawyers and politicians allied with the regime to draft a new constitution that banned Marxist parties and curbed labor rights. They sought to impede those who would run in future elections and the policies they could enact.

Jaime Guzmán, a conservative law professor and chief architect of that constitution, wrote in a 1979 magazine article that the charter “should ensure that if our adversaries govern, they should be constrained to act in a way that is not very different from what we wish.”

The constitution has been amended more than 50 times and stripped of most of the antidemocratic measures, according to law professors. A 2005 reform did away with the appointment of lifelong, nonelected senators, seats held by Gen. Pinochet and other military officials. Then-President Ricardo Lagos said the changes completed Chile’s transition to democracy.

Soldiers carried the body of President Salvador Allende out of the destroyed presidential palace in Santiago after a coup led by Gen. Augusto Pinochet in 1973.

Soldiers carried the body of President Salvador Allende out of the destroyed presidential palace in Santiago after a coup led by Gen. Augusto Pinochet in 1973.

Photo: El Mercurio/Associated Press

The charter continued to safeguard a laissez-faire economic model that limited the state’s role in the economy, privatized pension and health-care systems and increased private control over resources like water.

Economists and business leaders say the result has been the strong and stable growth that allowed Chile to attract foreign investments and cut poverty to about 8% from more than 40% in 1990, when Gen. Pinochet left power.

“The model has created an enormous middle class in Chile that didn’t exist before,” said Manuel Melero, president of the National Chamber of Commerce.

But many Chileans say the constitution has been a straitjacket on social reforms in a nation where the richest 1% of Chileans control about 33% of the country’s economic wealth, according to a 2017 United Nations report. The Organization for Economic Cooperation and Development ranks Chile as one of the most unequal of the 37 member states, even as economic disparity has fallen in recent years.

A classroom in Santiago that will serve as a polling station during Sunday’s referendum.

A classroom in Santiago that will serve as a polling station during Sunday’s referendum.

Photo: Esteban Felix/Associated Press

Those who want to change the constitution point to cases in which the charter blocked what they view as needed changes. In 2016, a high court, basing its ruling on the constitution, struck down key parts of a proposal to strengthen unions. The justices have also ruled against a policy to bolster a protection agency so it could level fines against companies that violated consumer rights. Unions have struggled to reduce the workweek to 40 hours, with the charter making change difficult.

“What this amounts to is a kind of sword of Damocles for any progressive government that wants to try a different version of a market economy,” said Javier Couso, a constitutional lawyer at the Diego Portales University in Santiago.

Victor Chanfreau, 18, says the process can’t wait. He was one of the high-school students who sparked last year’s demonstrations after they jumped Santiago’s subway turnstiles to protest against a 3-cent fare increase.

In 1974, Pinochet’s secret police were responsible for the disappearance of his grandfather, he said. For Mr. Chanfreau, a new constitution would erase one of the last vestiges of the dictatorship.

“Those that believe the constitution has worked well [do so] because they got rich at the cost of the suffering of others,” he said. “This is the first step of many more to completely finish off Pinochet’s legacy.”

Write to Ryan Dube at ryan.dube@dowjones.com

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