(Bloomberg) -- In the run-up to round one of Chile’s presidential vote last month, the election of billionaire Sebastian Pinera and his pro-growth agenda had almost felt like a foregone conclusion. So certain were investors that they giddily bid Chilean stocks up to a record high.
Now, on the eve of the decisive, second round on Dec. 17, the outcome doesn’t feel certain at all. Round one turned out to be a lot closer than pollsters predicted and Pinera’s team has appeared rattled in the aftermath. They’ve even resorted to a tried-and-true campaign smear across Latin America in recent years: Comparing Pinera’s rival -- Alejandro Guillier of the ruling center-left coalition -- to the socialist leader of the collapsed Venezuelan economy, Nicolas Maduro.
“They are painting the scene as a political emergency,” said Cristobal Bellolio, a professor at the School of Government at the Universidad Adolfo Ibanez. “It is a somewhat irrational fear, because Guillier is far from Maduro, but it is a genuine” concern among a section of voters.
It was that fear that sent the IPSA benchmark stock index tumbling 5.9 percent the day after the first round of voting on Nov. 19, when Pinera failed to convince much more than a third of voters to back him. It also depressed business confidence that had reached a three-year high the month before.
Polling stations will open at 8 a.m. (6 a.m. in New York) on Sunday and close at 6 p.m., with the first results expected about an hour later. Opinion polls show the run-off as too close to call.
Pinera, whose wealth is estimated at $2.7 billion by Forbes, has pledged to more than double economic growth, create 600,000 jobs and narrow the budget deficit. He likes to point to his track record as president between 2010 and 2014, when a copper boom helped growth to average 5.4 percent a year.
On the other hand, according to Pinera, Guillier represents a threat to the economic model that has made Chile the wealthiest country in South America.
“Every day Guillier seems more like Maduro,” Pinera said after the first round of voting. “I ask myself, where will that path take us?”
The warnings are continuous. After Guillier told a rally that his government would dip into the wallets of the rich, the head of Pinera’s campaign team responded that he was in the pocket of the Communist Party with a speech of “violence and aggression.”
There is logic to this exaggeration, said Kenneth Bunker, director of the electoral program at the Universidad Central.
“Pinera needs to maintain his own support, while trying to scare voters away from Guillier,” Bunker said. “The idea of Pinera’s campaign team is to enable him to win by persuading rival voters not to turn up.”
The former president won 36.6 percent of the vote in the first round against 22.7 percent for Guillier and 20.3 percent for Beatriz Sanchez, head of the newly created left-wing Frente Amplio alliance. Sanchez has since pledged her support for Guillier.
Still, the warnings of impending catastrophe can backfire. When one member of Pinera’s campaign team accused Guillier of trying to scare voters and then added in the same tweet she wouldn’t like to live in a country like Venezuela, she was roundly mocked. Chilezuela started trending on Twitter in Chile.
Just as worrying for Pinera, while business confidence fell following the Nov. 19 vote, ordinary Chileans were unconcerned, with consumer confidence reaching a two-year high that month.
The consumers may have a point. In Chile, growth may depend a lot more on the price of copper, the country’s principal export, than on anything the president does.
Neither are Guillier’s proposals very radical. His focus has been on encouraging industry to add more value to the country’s exports of raw materials, greater regional autonomy and infrastructure investment. There have been few details on health reform or precise spending plans for the education system.
Moreover Guillier’s alliance controls less than a third of the Chamber of Deputies. He’ll need the support of Frente Amplio and independent lawmakers, or Pinera’s coalition if he wants to get anything through Congress.
Sebastian Edwards, a professor at University of California at Los Angeles, estimates Pinera’s victory would add 0.6 percent to economic growth, if only because of the subsequent rally in business confidence. Just don’t believe the scare tactics on Guillier, he says.
“Guillier running Chile is still better than everything else in this region,” Edwards said.
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