Don’t let a corruption crisis go to waste: Lessons from structural reform in Chile
Country: Chile
Like many Latin American countries, Chile was hit with a series of disruptive corruption scandals in 2015. Unlike its neighbors, the Chilean government responded with an ambitious reform agenda, offering a master class in how the United States could avoid letting a corruption crisis go to waste.
Lessons:
Public outrage over scandals can create a narrow window for reform, but the opportunity must be seized quickly and forcefully.
Reforms worked in Chile because they were proposed by nonpartisan actors but pushed by a partisan president seen to be acknowledging her own failings.
Chile’s efforts to regulate lobbying show that there are more sophisticated routes to rein in influence peddling than simply banning politicians from becoming lobbyists.
At the start of 2015, then-president Michelle Bachelet towered over Chilean politics. A former defense minister, Bachelet had been elected to a second term by an astounding margin in 2013, and quickly went to work on a broad agenda to reform the tax system, education, and the country’s constitution. Bachelet appointed her son, Sebastián Dávalos, as head of the presidency’s socio-cultural area—the office traditionally held by Chile’s first ladies.
Bachelet was the first elected female head of state in Latin America who was not the wife of a previous leader. As such, the decision to appoint Dávalos as effective “first spouse” seemed to make sense. But doing so only magnified the fallout when, in February 2015, a story broke about how Dávalos and his wife had profited from a suspicious land deal tainted with apparent insider trading and influence peddling. In comparative terms, the scandal was a small one, as no public money was stolen, there was no clear policy quid pro quo, and there was no evidence Bachelet herself was involved. Yet the fallout was enormous. In part because larger bribery and corruption scandals had just recently implicated politicians in several major parties, Chilean voters responded with outrage. Bachelet’s approval rating eventually fell below 20 percent, and much of her reform agenda stalled.
What happened next, though, was arguably unmatched anywhere in Latin America—or the world. Less than a month after the scandal broke, Bachelet announced an independent presidential commission to study anti-corruption reforms, giving it seven weeks to complete a report. The resulting volume was more than 200 pages long and recommended 236 measures to prevent corruption, abuse of power, and influence trading—including, implicitly, behavior like her son’s.
Among other things, the new laws:
tightened campaign finance regulations and closed major fundraising loopholes;
strengthened the electoral courts and the capacity of the electoral service (SERVEL) to better police campaign finance-related and other election crimes;
improved lobbying, personal finance, travel, and gift disclosure requirements for members of government while clarifying conflict of interest laws;
amended rules on disqualifications for public office;
modernized political party funding mechanisms, governance, transparency, and financial regulation; and
tightened the governance of public finance and implemented various open data and open contracting procedures.As of July 2019, almost two-thirds of the proposed reforms have been enacted, and they seem to be working. In 2016, a poll found that 60 percent of Chileans thought the laws would restore trust in politics. According to the Capacity to Combat Corruption Index—a measure of legal, democratic, and civil society capacity against corruption—Chile is the strongest performer in Latin America.[1] According to a Transparency International report, the percentage of Chileans who report having paid a bribe is down 40 percent since 2017.[2]
To be sure, the reforms were not an unqualified success, and many of the (now-stalled) remaining reforms represent the most difficult and controversial steps. But in a global environment where precious few countries have successfully translated anger over corruption into structural reform in any way, Chile stands out as an example that comprehensive and sustained reform is still possible.
Several lessons emerge from Chile’s example:
Public outrage created a narrow policy window for reform. Because Bachelet and the commission moved so swiftly, momentum became self-fulfilling. In short, the crisis was not wasted. According to Roberto Simon, the head of the Anti-Corruption Working Group at the Americas Society/Council of the Americas, “once bills were put to a vote, deputies and senators felt an enormous pressure to vote in favor and not be perceived as undermining efforts to clean up the system.”[3]
Reforms are better, both as politics and policy, when crafted by nonpartisan voices. The commission and its chair—Eduardo Engel, a prominent economist and director of a nonpartisan think tank—were explicitly chosen to be independent and represent a diverse coalition of political actors.
Just as important is the power of principled (and to some degree self-sacrificing) partisan leadership. Bachelet’s decision to take responsibility even when her first instinct had been to fight off criticism was critical. Because Bachelet pushed reforms that explicitly spoke to her son’s corruption challenges, it was harder to muster partisan opposition.
Finally, the text of the Chilean reforms themselves should be studied with interest in the United States. Even though the political and legal situations are markedly different—many of the behaviors targeted by Chile, such as independent campaign expenditures, have been taken by the Supreme Court to be constitutionally protected in the United States—there are some possible inspirations for reforms.
Above all, Chile’s attempts to improve lobbying disclosures and special interest transparency are clearly applicable to the United States. Lobbying is one of the only anti-corruption areas where the United States tends to be ahead of the curve. In fact, as of 2016, only 22 countries regulate or track lobbying at all, and the United States is one of the most stringent, even with significant problems of underenforcement and non-reporting.[4] Yet the $3.5 billion lobbying industry is still a prominent concern for many American voters and reformers.[5]
Chile’s lobbying regulation, which was in development even before the 2015 reform efforts, goes beyond the United States in several ways. The law requires disclosure of all meetings and contacts with public officials as well as descriptions of subjects discussed during the meeting, location, time, and all attendees.[6] All travel and gifts/donations also are recorded and disclosed. That means there is a paper trail of every lobbyist’s contacts with public officials and every public official’s history of outside meetings[1] . The system also allows anyone to submit a request for a meeting, helping level the playing field for access.
There is a paper trail of every lobbyist’s contacts with public officials and every public official’s history of outside meetings
While there are still significant flaws even in Chile’s system, it shows that there are more sophisticated routes to regulating and reining in influence peddling than simply banning politicians from becoming lobbyists.
Recommended Reading:
https://www.americasquarterly.org/content/when-reforms-happen-chile
https://publications.atlanticcouncil.org/spotlight-corruption-chile/
End Notes:
[1] “Capacity to Combat Corruption (CCC) Index,” Americas Quarterly, 2019, https://www.americasquarterly.org/content/measuring-latin-americas-capacity-combat-corruption.
[2] Transparency International, “Global Corruption Barometer – Latin America and the Caribbean,” Transparency International, September 23, 2019, https://www.transparency.org/latin-america-and-the-caribbean.
[3] Roberto Simon, “From Scandal to Reforms: Chile’s Unusual Breakthrough,” July 22, 2019, https://www.americasquarterly.org/content/when-reforms-happen-chile.
[4] Libby Watson, “Influence Abroad: The State of Global Lobbying Disclosure,” Sunlight Foundation, November 30, 2016, https://sunlightfoundation.com/2016/11/30/influence-abroad-the-state-of-global-lobbying-disclosure/; Libby Watson, “What Is Shadow Lobbying? How Influence Peddlers Shape Policy in the Dark,” Sunlight Foundation, April 19, 2016, https://sunlightfoundation.com/2016/04/19/what-is-shadow-lobbying-how-influence-peddlers-shape-policy-in-the-dark/.
[5] “Lobbying | OpenSecrets,” accessed June 11, 2019, https://www.opensecrets.org/lobby/index.php; Alex Gangitano, “2020 Democrats Vow to Get Tough on Lobbyists,” Text, The Hill, July 7, 2019, https://thehill.com/business-a-lobbying/451748-2020-democrats-vow-to-get-tough-on-lobbyists.
[6] “Ley Del Lobby,” Gobierno de Chile, accessed July 17, 2019, https://www.leylobby.gob.cl/.
