Chilean lawmakers have agreed to hold a referendum in April 2020 to scrap the General Augusto Pinochet-era constitution, aimed at reducing inequality problems that have sparked nationwide protests for more than a month.

The country’s parliament members signed a two-page document titled “The Agreement For Peace and A New Constitution” after a long-hour debate. The deal calls for a commitment to creating peace and public order following mass rallies that have turned violent and killed around 20 people.

Why are Chileans taking to the streets?

The increase in subway fare has sparked nationwide rallies since early October in the country once ruled by the military regime. Protesters argued that the public transport fare hike has deepened inequality despite Chile’s robust growth.

On October 26, around one million Chileans took to the street in the capital Santiago, demanding economic reform. This rally was considered the largest after the end of the Pinochet regime in 1990.

Chilean President Sebastian Pinera responded by replacing most of his cabinet members. The leader has reshuffled his cabinet twice in the last 15 months. However, such a move did not satisfy Chileans as they wanted the billionaire president to resign from his post.

The 69-year-old president refused to step down, arguing that he was democratically elected. He vowed to take responsibility for the country’s deep inequality, though he claimed he was not the only one to take the blame.

In early November, rallies turned violent when protesters looted the Rome Catholic church and burnt a campus building, Deutsche Welle reported.

Inequality due to neoliberalism economy

A free-market economy that cuts subsidies and privatizes pension (inherited by the Pinochet regime) also angers Chileans. The privatized pension system in Chile has forced Chileans to work hard past their retirement age due to the high payments. The recent poll showed that 50 per cent of Chileans say pension reform is the most urgent issue that needs the government’s handling.

Despite being one of the most prosperous Latin countries, Chile has the highest inequality level among the Organization of Economic Cooperation and Development(OECD) member countries.

Chile’s income gap is 65 per cent higher than the OECD average.

 According to a 2018 government research, as quoted by Reuters, the income of the wealthiest in Chile was 13.5 per cent higher than the country’s poorest.

The image of Pinera eating pizza in an expensive restaurant on the first night of chaos enraged Chileans, regardless of their social classes. Most Chileans are aware of the situation and watching that the government is doing little to narrow the income gap, making Chileans more demanding than people in other countries.

“In Chile’s case, the state is doing nothing in terms of redistribution or to diminish differences in people’s incomes.

“What ends up happening is that people get fed up. Chile has a population that is increasingly educated, that is increasingly aware of the things that are happening, so I think it becomes more difficult to pull the wool over their eyes,” Rodrigo Pérez, a professor of development economics at Santiago’s Universidad Mayor, told Reuters.

Therefore, Chileans want the constitution to be written from scratch. However, the next question lingers.

Will the new constitution end Chileans’ inequality problem?

According to Cesar Valencia, market analyst at Alpari in Santiago, Chile, there is still a debate on whether the new constitution is necessary to end inequality problems.

“That is the great debate we have these days because those who support a new constitution are convinced that it will solve the problems of inequality in our society, because social rights will be incorporated into the new Magna Carta. So the state must make every effort to guarantee society the necessary means to reduce this gap and improve the quality of life of all Chileans regardless of their status,” Valencia told Insideover

On the other hand, those who oppose the constitutional overhaul and want to maintain the constitution of 1980 say that to improve education, pensions, health, end corruption, etc. A new rule is not necessary, but rather to advance laws that aim to end these problems and thus improve the quality of life of Chilean society, “Valencia added.

The Pinochet-era law applies free-market reform, which shifts the state’s responsibility for providing social services to the private entity. However, there is a growing concern from those opposing a new constitution that the welfare system will create a situation like in Bolivia and Venezuela, where a person is eager to stay in power. Still, the fiscal expenditure will increase the state debt, as Valencia explained.

Former president Ricardo Lagos revised the constitution in 2005 by including the state’s recognition of indigenous groups. However, such a change is not seen as the most radical one given the 1980 Pinochet-era rule was still used as the base, Valencia said.

“What is clear is that I have already begun the constitutional process, and there is no going back. Regarding whether or not this will end the inequalities denounced by the population, only time will tell, that is why we are looking to encourage people to vote and thus have the highest possible representation in the new cycle that begins from Chilean society,” Valencia closed the interview session.

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