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 Bachelet won with about 62 percent support, the highest share of
votes for any presidential candidate since the country returned to
holding democratic elections in 1989.
The landslide victory against Evelyn Matthei, the conservative
candidate of the Alianza coalition, puts Bachelet back in the Moneda
presidential palace after a four-year gap and gives her a mandate to
push for an education overhaul and the fiscal reforms to help pay
for it.
"Chile has looked at itself, has looked at its path, its recent
history, its wounds, its feats, its unfinished business and this
Chile has decided it is the time to start deep transformations,"
Bachelet told a jubilant crowd of supporters on Sunday night as
confetti rained down.
"There is no question about it: profits can't be the motor behind
education because education isn't merchandise and because dreams
aren't a consumer good."
Good quality schooling is generally only available in Chile to those
who can pay, and massive student protests demanding change — which
sometimes turned violent — hurt the popularity of outgoing
conservative president Sebastian Pinera.
Bachelet ran on a platform of social policies to address a deep
divide between rich and poor, and plans to hike the corporate tax
rate.
Chile, the world's top copper-exporting nation, is ranked the most
unequal country in the 34-member Organization for Economic
Cooperation and Development (OECD).
"She will govern a country with profound demands for change,"
Senator Ricardo Lagos Weber of Bachelet's New Majority coalition
told Reuters. "The country isn't flat on its back, it is healthy,
organized, growing economically, creating jobs and improving
salaries. But it is also deeply unequal."
HIGH EXPECTATIONS
Plans to change a constitution and electoral system that date back
to general Augusto Pinochet's 17-year dictatorship -which ended in
1990 — are also among Bachelet's campaign pledges.
"Bachelet has promised a lot and expectations are high, while the
(economic) situation isn't as favorable as it was in recent years,"
said Patricio Navia, a political scientist and professor at New York
University.
If she does need to water down her promises because slower growth
makes increased public spending tricky — or if opposition becomes
obstructionist in a congress that remains divided after
parliamentary elections last month — she could herself face popular
protests.
Shortly after her victory on Sunday, hackers posted a message on the
education ministry's Web site saying "Mrs. President we will take it
upon ourselves to make things difficult for you. Next year will be a
time of protests."
After expanding 5.6 percent last year, Chile's economy is seen
ending 2013 with 4.2 percent growth and hitting between 3.75 percent
and 4.75 percent next year.
One of Bachelet's main economic policies looks to reduce the
effective fiscal deficit from roughly 1 percent of gross domestic
product to zero by 2018, but a slowdown could make that target tough
to hit.
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THE FED FACTOR
Additionally, the U.S. Federal Reserve is expected to announce a
pullback of its bond-buying program sometime soon, with some
investors betting this could happen as early as this week.
The program has supported riskier assets such as commodities and
equities and a tapering of the rate of purchases could heighten
global volatility and borrowing costs for Chile and other Latin
American states.
Bachelet's supporters say her reforms to boost tax revenue could
help finance public spending even when growth slows.
Among other things, the reform will look to progressively raise
corporate taxes to 25 percent from 20 percent, bringing the rate
closer to that of developed nations.
"A tax reform should have happened a long time ago to give resources
to the state and to balance inequalities. But better late than
never," said Carlos Huneeus, who runs research center Cerc.
Despite progress made by Bachelet's coalition in legislative
elections last month, divisions in Congress mean her reformist
aspirations will be subject to political wrangling.
"Support from a few independent politicians in the Senate and the
lower house seems achievable, but the formation of a broader
consensus will likely require the future president to compromise on
some of the most controversial aspects of her agenda," said Tiago
Severo at Goldman Sachs.
Last month, Bachelet's bloc clinched the simple majority it needs to
pass tax reforms.
But for the four-sevenths majority required for education reform,
Bachelet will need to butter up independents or opposition
legislators — from some of whom she has already received hints of
backing.
Senator Lagos, the son of former president Ricardo Lagos, believes
popular discontent can be harnessed to build support for the
reforms.
"We've never been better positioned than now to make reforms. I
don't foresee an obstructionist opposition — that's going to have a
high cost for them considering what people are demanding," he said.
(Editing by Kieran Murray, John Stonestreet)
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