Chile shifts right as billionaire wins presidency

• By Alonso Soto and Simon Gardner
• 2 hrs 37 mins ago

SANTIAGO (Reuters) – Billionaire Sebastian Pinera was elected Chile's president on Sunday in a political shift to the right after 20 years of leftist rule and will try to build on policies that made the economy Latin America's most stable.

Pinera won almost 52 percent of Sunday's run-off vote, the first time the right has wrested power from the center-left since General Augusto Pinochet's 1973-1990 dictatorship ended, signaling Chile is moving on from the former strongman's bloody legacy.

Pinera's victory over ex-President Eduardo Frei of the ruling leftist coalition marks a shift to the right in South America, a region dominated by leftist rulers from Venezuela to Brazil. The Harvard-educated airline magnate takes office in March.

The market favorite's win helped boost Chile's bourse to new life intraday highs on Monday morning.

Pinera, 60, has vowed to give Chile's state a business-like overhaul to boost efficiency, promising to create a million jobs and boost economic growth to average 6 percent a year. The economy shrank in 2009, its first recession in a decade.

Critics say Pinera's plan depends too heavily on the private sector generating jobs and banks on a steady global recovery maintaining copper demand.

He could also struggle to push reforms through a divided Congress, and has promised to form a national unity government.

"The problems we face in the future are great, the obstacles we face are very challenging and we need unity now more than ever," Pinera said on Sunday evening, standing next to Frei.

"We will form a government of national unity which will build bridges of understanding and knock down walls of division," he added, offering an olive-branch to what could be tough opposition from a fractured left.

Chilean stocks, already rallying on a recovery from global crisis and high prices for top export copper, forged ahead, buoyed by Pinera's election win.

Investors are also watching closely for the promised sale of his more than 25 percent stake in flagship airline LAN, one of the region's leading carriers, as well as other assets as he sets aside his empire to avoid conflicts of interest.

Pinera has already placed hundreds of millions of dollars worth of investments in a blind trust.

LEFT IN DISARRAY

Support for the ruling leftist coalition dwindled, with voters saying it should have made better use of billions of dollars in copper boom revenues that were stashed away in a sovereign wealth fund.

There also was growing frustration that an old guard has dominated politics in Chile, also a major salmon, wine and fruit exporter.

"I think the country deserves a change. The same people have governed for a long time," said 18-year-old nursing student Joanna Garcia, waving a flag outside Pinera's campaign headquarters. "I think Pinera will do things very well."

Pinera has said he will maintain prudent fiscal policies and expand social programs to include Chile's large middle class, which has complained of neglect.

His economic program also includes an overhaul to state giant Codelco, the world's top copper miner, and sell a minority stake to improve its efficiency.

"Policy continuity seems assured as neither the opposition nor the government coalition question the main pillars of the disciplined and market-friendly macro policy mix in place," said Alberto Ramos, a senior economist at Goldman Sachs in New York.

A divided Congress and likely resistance from powerful mining unions will mean Pinera will have to reach out to his opponents to be able to push through legislation, meaning he could be forced to water down some of his policy plans.

Possible further fragmentation of the left could make it harder for Pinera to seal deals.

An extreme sports enthusiast who flies his own helicopter, Pinera succeeded in distancing himself from the legacy of Pinochet's rule, when more than 3,000 people were killed or "disappeared" and around 28,000 were tortured.

Frei, whose 1994-2000 presidency was shaken by recession, sought to cast the Pinera-led right as Pinochet's heirs, but ultimately failed to galvanize the left.