FORMER PRESIDENT OF CHILE
2002 & 2005 LEADER OF THE YEAR
The most complex decision former Chilean President Ricardo Lagos Escobar made during his six years in power was saying no to president George W. Bush about his decision to start the war against Iraq. Chile was a member of the United Nations Security Council. “I knew that President Bush had to get Chile’s vote to arrive at the nine votes he needed. That’s why I was involved in the issue. We had a cordial relationship with the president. He called me Ricardo, and I called him George. We spoke often,” he told Latin Trade.
During the time leading up to the conflict, Ricardo Lagos was working tirelessly with British Prime Minister Tony Blair to try to reach an amicable agreement at the United Nations. “The war and peace decisions in the world are made at the Security Council,” he said.
However, the solution didn’t look so simple. Lagos Escobar began to receive calls from President Bush, and he confessed that he had given his teammate Tony Blair the job of convincing him. “I was aware that they were giving me a full court press,” he joked. In a last ditch call, the President of the United States wanted to know whether he had the deciding vote. “I said to him, President, let’s wait one more month. Hans Blix, (the inspector of the United Nations commission of oversight, verification and inspection,) needs to know whether the weapons of mass destruction exist. If they do, we’ll be with you. You’ll have my vote,” the former president said.
Bush insisted that he couldn’t wait. “President, I think another month is indispensable,” replied Lagos Escobar. The American president repeated that it was urgent. “Under those circumstances, I had to say no.”
Then he had to repeat his negative reply. After Bush decided to invade, he asked the Chilean president to join the coalition of the willing, which consisted of some of his allies. “I had to say, President, we are good friends, but this is outside of the Security Council. I cannot go to war.”
“I was aware that he didn’t like my answer. He told me, Mr. President – and this time he didn’t call me Ricardo – I thank you for your frank response. And I told him, Mr. President, friends speak frankly. Because I consider you my friend, I can speak frankly and tell you what I think.”
The story has a happy ending for Chile. “This conversation was in March 2003. We had finished negotiating the free trade agreement with the United States in December 2002. We were in the process of doing the translations.” But despite what some feared, the accord was signed in June 2003. “In honor of the truth, I never received any pressure from anyone who told me that we had to say yes to the war in order to approve the treaty. I understood that free trade was free trade, and this was a mutual understanding.”
Ricardo Lagos places a high value on international trade. He believes that, without a doubt, the policy that most strongly boosted Chile’s economic growth in the last two decades was the signing of free trade agreements. He recalled when he signed the pact with the European Union in 2002, “not a single cold storage plant in Chile passed the quality standards they had to meet in order to export meat to Europe.” Today, Chile has a 40,000-ton export quota for high quality meat. “A free trade agreement is an incentive to add value to primary products and thus to create the potential for more production and jobs,” he said.
During Lagos Escobar’s presidency, his country signed nine trade agreements, including those with the United States, China, Korea and the European Union – which opened up the markets of 27 nations. “Ninety-five percent of Chilean trade is done under the wing of a free trade agreement. Our average tariff is two percent,” he said.
Former President Lagos Escobar has always been a friend of great changes. Before he became president, as minister of public works, he succeeded in convincing his officials about the need to create public-private partnerships to develop the infrastructure his country needed. “Bringing in private capital to the main highways enabled us to double the level of investment in infrastructure,” he said.
Even more interesting, the money that wasn’t used in large public works due to the arrival of private funds was used for social infrastructure. “Upgrading the modest secondary roads, which were dusty in summer and muddy in winter, was what was done with public funds,” he explained. It was hard to sell this decision because private participation had opponents, even among the leaders of his own political group. “This is to catch-up, I told them.”
Politicians and technicians
It would appear that Chile has done everything right. It’s just a few years short of becoming the first developed country in Latin America. Its income per capita almost quintupled between 1993 and 2012, rising from $3,417 to $15,356. Additionally, it is the region’s most competitive country and the second best with human capital. Chileans made their policies foster growth. How did they do it?
“The important thing is to have an idea of where do we want the country to be in 20 years. The problem with politicians, by definition, is that they only look ahead as far as the next election. But you have to look at the needs of the next generation, not the next election,” he said.
For that, he proposed to the politicians that they use their leadership to explain why, sometimes, they have to take measures which, although they may not be popular, have to be seen from a long-term point of view. As an example, he mentioned the decision that forced Chile to save part of its revenues in times of high copper prices, so that it could spend more when times were hard. “We learned that we had to have countercyclical policies. As politicians, we lack this long-term view to be able to understand how to serve our country better,” he said.
When asked whether the technocrats should therefore educate the politicians, the former Chilean president didn’t completely agree. “I think there has to be reciprocal education, because the technocrats sometimes don’t understand that there are also political demands that are needed.” They need to understand that the politicians, like democracy itself, have to show results.
But there’s more. “The technocrats can say the country is growing marvelously well at five percent. But if the citizen sees that his street still has the same potholes, that the neighborhood is insecure, that public transportation is bad, that the desks in the school are in bad condition, then he will not see any of it.” These are situations that justify education in the other direction. “Sometimes we have to tell the technocrat: let me show some of this five percent to the ordinary citizen.”
Change of focus
How does Ricardo Lagos view the economic changes in Latin America? He thinks that in the last 20 years there have been big shifts that have modified the region’s economic make-up. One of the first of these is that “after so many crises we have learned to manage macroeconomics. We have learned that the financial accounts have to be in order, that inflation is a scourge that we have to fight, that monetary policy is important.” He added, the region has learned to make democracy and issues like human rights compatible with economic growth.
As well, Latin America has come to understand the need to “incorporate certain social policies that are focused so that we can be sure that if our macroeconomic measures are successful and there has been growth, that this growth reaches all sectors.”
Also, he said, more and more countries understand that globalization will not go away. “Globalization is here to stay. Whether we like it or not, it’s a fact of life.” On the continent, he continued, it has become better understood that economies can open up to have larger markets, and it’s essential to take measures to have a more global economy.
Lastly, he mentioned Asian growth. It wasn’t shaped by Latin America, he said, but the region has taken good advantage of it because it has known how to prepare for the boom times.
Independent, disciplined, serious, a promoter of free trade and investment, and well respected in his country, Ricardo Lagos Escobar is not only a man of his time, but also the one who has transformed it in such a way that one could say, without exaggerating, that he is also one of the ones who has forged his time.
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