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C O N F I D E N T I A L SECTION 01 OF 04 SANTIAGO 000025

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STATE PLEASE PASS TO FEDERAL RESERVE TOM CONNORS
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AMEMBASSY BRASILIA PASS TO AMCONSUL RECIFE

E.O. 12958: DECL: 2020/01/22
TAGS: PGOV PREL ECON CI
SUBJECT: Meet Chile's President-Elect, Sebastian Pinera

REF: A. SANTIAGO 19; B. 09 SANTIAGO 755; C. 09 SANTIAGO 867

CLASSIFIED BY: Carol Urban, Charge, State, US Embassy Santiago;
REASON: 1.4(B)

¶1. (SBU) Summary: Chile's president-elect, Sebastian Pinera, is a
savvy, Harvard-educated billionaire and former senator known to
work seven days a week. Although described by some international
press as "right wing" and sometimes compared to Italy's
scandal-prone Silvio Berlusconi, neither is accurate. Pinera is an
anti-Pinochet centrist who will be challenged to satisfy his broad
Alianza coalition which spans from the center to the far right. He
has pushed the envelope in his political and business dealings in
the past, but is now moving his substantial investments into blind
trusts to avoid conflicts of interest. His unquestioned devotion
to his wife of 30-plus years and his Catholic faith provide little
fodder for personal scandal. End summary.



¶2. (U) In the historic January 17 election, Chilean voters selected
opposition candidate Sebastian Pinera as the next president of
Chile, beating his opponent, former president Eduardo Frei
Ruiz-Tagle, by a three point margin. Pinera will be the first
conservative to lead Chile since the Pinochet dictatorship
(1973-1990) and the first conservative to be democratically elected
president since 1958. (See Ref A for more elections analysis.)



The Billionaire President

--------------------------------



¶3. (U) The son of a civil servant/diplomat, Pinera grew up in New
York, Belgium, and Chile. He studied Business Administration at
the Catholic University of Chile in Santiago, where he received the
Raul Iver Award -- the highest distinction possible. In 1973, he
went as a Fulbright scholar to Harvard (where his older brother
Jose also studied) and earned a Masters and Ph.D. in Economics.
Pinera speaks English reasonably well, though it is a bit rusty.
(See Ref B for details about his family and additional biographical
information.)



¶4. (U) Upon his return to Chile in 1976, Pinera worked for the
World Bank, the Inter American Development Bank (IDB), and the UN's
Economic Commission for Latin America and the Caribbean (ECLAC) on
projects designed to reduce poverty in Latin America. In the
1980's, Pinera moved into the private sector, where he demonstrated
his ability to successfully navigate financial markets. After
making a small fortune as a financial advisor, Pinera started
Tolten, a homebuilding business. The success of this company
provided the capital to invest in other business ventures, among
them Bancard -- the corporation that introduced credit cards to
Chile. Bancard brought Pinera more wealth and he continued to
invest in a variety of Chilean industries.



¶5. (SBU) Pinera prides himself on being a self-made billionaire.
In 2009, Forbes ranked him number 701 on a list of the world's
richest people, with a fortune of USD 1.3 billion. Among his most
noteworthy acquisitions are a 26 percent stake in the leading South
American airline LAN, a 13 percent stake in iconic soccer team Colo
Colo, and full ownership of television station Chilevision. Pinera
has promised to place his assets in a blind trust before assuming
the presidency, and press accounts state that he is currently
working to sell his shares in LAN.

SANTIAGO 00000025 002 OF 004


Pining for the Presidency: Fourth Time's a Charm

--------------------------------------------- --------------------



¶6. (SBU) Pinera's political career began with his campaign for
senator in eastern Santiago in 1989 as an independent supporting
the center-right National Renewal party (RN). After winning the
election, he officially aligned himself with the party. During his
eight years as senator, Pinera gained the respect of his colleagues
for his work on a variety of issues, including on the Senate
Finance Committee. In a vote of his peers, Pinera was chosen as
one of the two best senators for the period of 1990-1998. He did
not run for reelection. Pinera became president of the National
Renewal party in 2001 and successfully shifted the party towards
the center during his mandate.



¶7. (SBU) Leading Chile has long been Pinera's dream. His first
attempt, in 1992, ended prematurely when a secretly recorded phone
call was released showing him colluding with a journalist to
undermine his rival, Evelyn Matthei (Ref B). He was RN's
presidential pre-candidate in 1999 but stepped aside so his Alianza
coalition counterpart, Joaquin Lavin of the Independent Democratic
Union (UDI), could run unhindered. (Lavin lost to Ricardo Lagos by
a small margin in the runoff.) In 2005, Pinera decided to run as
RN's presidential candidate, splitting the Alianza coalition, as
Lavin was running again as the UDI candidate. Pinera edged out
Lavin in the first round -- generating resentment in the UDI -- but
then lost by seven percentage points to the Concertacion
coalition's Michelle Bachelet in the runoff. After his loss,
Pinera quickly shifted his sights to the 2009 presidential
campaign.



Where Do Pinera's Loyalies Lie? With the Center, Center-right, or
Right?

--------------------------------------------- ----------------------
-----------------------------



¶8. (SBU) Growing up in a Christian Democrat family--his father was
one of the party's founders--influenced Pinera's early political
leanings. He speaks openly about how Christian Democrat Eduardo
Frei Montalva -- President of Chile from 1964-1970, a friend of his
father's, and father of his main presidential opponent Eduardo Frei
Ruiz-Tagle -- influenced his political beliefs. Pinera attributes
his own shift away from the center-left Christian Democrats to
their "backwards" economic policies.



¶9. (SBU) Pinera has an uneasy relationship with Alianza coalition
members from the far right. Unlike many in his conservative
Alianza coalition, Pinera voted "No" in the 1988 plebiscite, the
option that voted down eight more years of military rule by
Pinochet and paved the way for the democratic transition and
elections in 1989. More recently, his outspoken criticism of
Pinochet, support for civil unions for gay couples, and backing of
the day-after contraceptive pill have made Chile's far right
uncomfortable. In an effort to appease the far right, Pinera gave
a speech during his campaign to a large group of retired military,
promising to bring an end to "eternally" pending human rights abuse

SANTIAGO 00000025 003 OF 004


cases against the military.



¶10. (SBU) Throughout his campaign, Pinera billed himself as a
centrist and promised to continue many of President Bachelet's
popular social policies. Since his victory, he has promised to
work with the outgoing Concertacion government for a smooth
transition. Advisors Rodrigo Hinzpeter and Cristian Larroulet
recently had their first meeting with outgoing Interior Minister
Edmundo Perez Yoma. Analysts are anxiously awaiting the
announcement of Pinera's cabinet -- scheduled to be announced in
February -- and whether or not he will include former Pinochet-era
officials in high level government positions.



No Stranger to Scandal

------------------------------



¶11. (SBU) In addition to the infamous phone call which ended his
1992 presidential bid, Pinera has been linked to a number of
financial and political scandals over the years. He is alleged to
have been involved in shady financial dealings while general
manager of a bank in the late 1970s and to have evaded a resulting
arrest warrant in 1982. In 2007, he paid a USD 700,000 fine to
Chile's equivalent of the Securities and Exchange Commission for
insider trading but never admitted culpability. A shrewd
businessman, Pinera seeks any advantage possible in business or
political dealings, often getting close to the limits of ethics or
legality. (See Ref C for more on Pinera's scandals.)



A Hard-Driving Businessman Striving for a Softer Image

--------------------------------------------- ----------------------
-----



¶12. (C) Pinera is known for his rigor, intelligence and dedication.
He works seven days a week and sleeps little. He expects to have
several hours notice before a meeting so that he can do his own
research and be an informed audience. He will listen and consider
an opinion he considers substantive, but will interrupt and even
ask someone to leave if he feels they are not making a valuable
contribution.



¶13. (C) Pinera makes high demands on his staff but rewards
loyalty. In remarks to close advisors at an election night party,
he told them that he would need their intelligence, hard work, and
obedience. A micro-manager, he wants to be in control of every
detail, from the content of a speech to the camera position and
lighting. Press reports have speculated that he may make life
difficult for his cabinet members given his broad knowledge and
hands-on leadership style.



¶14. (C) As a presidential candidate, Pinera tried to eschew his
billionaire image and show his human side. He campaigned
tirelessly around Chile, calling himself the "locomotive," and he
embraced new social networking technology like Facebook and
Twitter. Despite his efforts to cultivate a "man of the people"
image, he surrounds himself with elite businessmen and academics

SANTIAGO 00000025 004 OF 004


and continues to pilot his private helicopter to his vacation
homes.



Chile's New First Family: The Pinera-Morels

--------------------------------------------- ------------



¶15. (U) Pinera has been married for over thirty years to Cecilia
Morel Montes and they have four adult children: Magdalena,
Cecilia, Sebastian and Cristobal. Pinera is surrounded by family
advisors. His younger sister Magdalena ("Pichita") runs his
charity, the Future Foundation, and his daughter Magdalena
("Manena") was a key player in the campaign and is an important
advisor for his transition team. His sons also worked on the
campaign and appeared in press conferences and other public events.
Pinera is a practicing Catholic. His uncle, Bernardino Pinera, is
a priest.



¶16. (SBU) Pinera's wife, Cecilia Morel, studied social work at the
Carlos Casanueva Professional Institute and has worked in the
social assistance sector for the past twenty years. She founded
the Enterprising Women Foundation which works to help young women
in a low-income area of Santiago by providing professional
development training and consulting for micro-enterprises. As
First Lady, Morel proposes to develop a housing improvement program
for Chile's rural areas, a network of after-school centers for
children with learning disabilities, and a sports program for at
risk youth.



Comment

-------------



¶17. (C) Pinera, a highly educated and wildly successful
businessman, brings a substantial change to Chile after 20 years of
Concertacion rule. Intelligent, hard-working, and determined,
Pinera will be a hands-on president. Since he owes his election to
votes from both the center-left and the right, he will have to
strike a careful balancing act to maintain his promise of
continuity with Bachelet's progressive policies while keeping his
supporters on the far right happy as well. End Comment.
URBAN