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November 15, 2022

Enduring influence of vested interests

After the financial crash of 2008 when Iceland’s politicians and bankers were found to have been in cahoots with a number being subsequently jailed, there was a popular groundswell of support to draft a new constitution for the country that would specifically address the issue of powerful vested interests subverting democracy. Similarly encouraging signs of popular democratic renewal have been observed recently in Chile – a country not without its democratic challenges in the past. In both countries, despite massive popular support during the process, somehow those vested interests managed to cling on. Lessons to be learned.



With its rich and sometimes turbulent history, Chile is a beautiful country, whose economic and social performance in most respects surpasses that of its neighbours. Comparison with Argentina and Brazil is close to hand—together, these three countries cover two-thirds of Latin America.

In 1988, Gen Augusto Pinochet lost a referendum on his plan to continue as president of Chile. The army he led had seized power in 1973 from the democratic government of Salvador Allende. Pinochet respected the result and left office in 1990. At that time, Chile was poorer than Argentina or Brazil, measured in the per capita purchasing power of national income—now it is richer.

Not only that. Life expectancy at birth has reached 80 years, compared with 77 in Argentina and 76 in Brazil. Chile trades more openly with the rest of the world and has a more solid democratic system, with a more independent judiciary and less corruption, as international indices of democracy, the rule of law and corruption attest.

Nevertheless, the people of Chile carry heavy burdens from the past, including a constitution from the days of the military dictatorship. National income and wealth are unevenly distributed, although not so extremely as in Brazil.

Protests broke out in 2019, when one in five residents of the capital, Santiago, took to the streets, demanding justice as well as the resignation of the centre-right president, Sebastián Piñera. Thirty-six people were killed, thousands injured and thousands more arrested. The spark that lit the fire was a relatively minor increase in public-transport fares.

These events led the government to call a referendum in 2020, where voters were asked if they wanted a new constitution. The result was unequivocal: 78 per cent said yes.

The government held a special election in May 2021 to a 155-member Constitutional Convention. The understanding was that parti-pris members of parliament were not to draft the new constitution—no more than they were assigned that task in the United States back in 1787 or latterly in Iceland in 2010.

The convention did eventually approve a new constitution, which was put to a referendum last month. Guardians of the status quo had insisted that a two-thirds majority would be required for the draft to be submitted for popular endorsement—presumably hoping such a high threshold would prove unsurmountable. Yet, though that bar was passed, somewhat unexpectedly 62 per cent of voters rejected the constitution, which had been championed by the country’s recently-elected leftist president, Gabriel Boric, and the movement catapulting him to the presidency.

Outdated constitutions

Comparison with Iceland sheds light on events in Chile because of the partially similar background. Both countries have outdated constitutions. That for Chile was drawn up by a brutal junta in 1980, while Iceland’s 1944 version bears the hallmarks of that drawn up to suit the Danish king in 1849. Unsurprisingly, both nations desired an upgrade.

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Both countries had their constitutional moments of protest, Chile in 2019 and Iceland in 2008. Then Icelanders took to the streets, banging pots and pans and demanding a proper accounting for the financial collapse which had taken place—and a new constitution. Both countries entrusted directly-elected representatives to do the work, not politicians.

But here the two parted ways. In Chile, political parties nevertheless immersed themselves in the election to the Constitutional Convention. By contrast, in Iceland in 2010 parties had little or no involvement in the Constitutional Assembly election—although six Supreme Court judges tried after the fact to invalidate it on grounds flimsy at best. Five had been appointed by ministers of justice of the Independence Party, an unyielding opponent of constitutional reform.

The Icelandic parliament reacted to the Supreme Court’s decision by appointing the 25 representatives elected to the assembly to a Constitutional Council, which deliberately placed itself outside and above the political arena and, therefore, could not be accused of being biased to right or left. The council in this respect followed a 2010 National Forum, where 950 representatives had been chosen at random from the national register. All adult Icelanders had an equal chance of being chosen to sit and make their voices heard. After its deliberations, supervised by domestic and foreign experts in collective intelligence, the forum concluded that Iceland needed a new constitution, with inter alia equal weighting of votes (‘one person, one vote’) and national ownership of natural resources, to sever the umbilical cord tying politicians to vessel-owning oligarchs.

Political factions

The Constitutional Convention in Chile did things differently. In keeping with how it came into being, the assembly split into political factions, with the left wing enjoying the upper hand. Afterwards, right-wing opponents of the agreed draft argued, partly correctly, that it was biased in favour of the left. This spelt trouble and had a lot to do with its defeat in the referendum. It did not help that the convention was widely perceived as having tried to accomplish too much by producing a draft that was too long, too detailed and too intrusive with 388 articles (compare the 114 articles in Iceland’s version).

In Iceland, the Constitutional Council managed in peace and quiet to draft a new constitution and approve it unanimously—no objections, no abstentions. No other constituent assembly has ever managed that. The council did not split into factions and during its four months of work in 2011 did not experience any significant attempts at interference by politicians or special-interest groups.

The Constitutional Convention in Chile could not do this because it was divided into factions aligned with parties in the National Congress. Right-wing opponents were thus able to characterise the draft as a left-wing manifesto, exploiting their control over powerful media before and after the referendum to do so.

Iceland’s new constitution is politically colour-blind, except perhaps that its preamble states: ‘We, the people of Iceland, wish to create a just society with equal opportunities for everyone.’ The remainder implements the ideal of constitutional impartiality: everyone gets to sit equally at the same democratic table.  

The new constitution was fully in line with the conclusions of the 2010 National Forum and enjoyed the loyal support of those who helped to compose it with thousands of written comments on the interactive website of the Constitutional Council. Ever since, opinion polls have shown a consistent two-thirds majority in its favour.

The president and the government of Chile responded to their referendum defeat by declaring that the will of the voters would of course be respected. Another attempt would have to be made to respect the will of 78 per cent of the voters in the 2020 referendum to have a new constitution. Chile will thus have to go back to square one.

Reasonable distance

I discussed the issue with Chile’s economy minister, Nicolás Grau, at an open session at Queen Mary University of London earlier this month. I hope the minister will have taken the message home that it is possible to attract voters to a new, forward-looking constitution if parties and special-interest groups are kept at a reasonable distance.

This matters. Prof Jon Elster of Columbia University, one of the world’s leading constitutional experts, describes the opponents of legitimate constitutional reform as sometimes thriving on ‘cheap access to natural resources, a skewed electoral system, unsound banking  practices, and corrupt politicians’—which sounds quite familiar to Icelandic ears. Both Chile and Iceland have a problem in this regard.

Elsewhere Elster writes: ‘Contrary to a traditional view, constitutions are rarely written in calm and reflective moments. Rather, because they tend to be written in periods of social unrest, constituent moments induce strong emotions and, frequently, violence.’ Perhaps enough calm will return to national life in Chile for the pressure for a new constitution to subside, so that for the time being Chileans will have to live with the 1980 version. That would please the remaining followers of the junta.

Iceland’s constitutional moment was the financial collapse, exposing the incompetence of the closely-connected business and political elites. Politicians were caught in bed with bankers, many of whom received prison sentences for multiple crash-related offences, accumulating a total of 88 man-years in prison. Humbled, the politicians lay low, going along with the people’s demand for a new constitution and keeping themselves at arm’s length.

Return to old ways

The unanimous acceptance of the new constitution in the Constitutional Council in 2011 was succeeded by 67 per cent support in the national referendum called by parliament ten years ago today. Yet parliament returned to its old ways by failing to ratify the new constitution. Politicians mustered the courage to disregard the result partly because the economic rescue orchestrated by the International Monetary Fund produced at first better and quicker results than expected—even if full recovery took the same eight to nine years as in most other countries. The politicians got away with their betrayal of the citizens. Left behind were disappointed voters as well as the many victims of the financial collapse.

Parliament has had a decade to make amends but there is still no sign of repentance or redress. It has thus relegated Iceland to the growing group of countries where democracy and decency are under stress, as documented by international indicators of democracy and transparency.

Perhaps it will take another collapse for Iceland to finally get the new constitution the voters chose in 2012. But it is never too late for parliaments to do the right thing.