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Chile’s stock market drops after proposal to rewrite constitution

Chile’s stock market drops after proposal to rewrite constitution

Investors fear that the move by Sebastián Piñera would undermine the economy

President Sebastián Piñera’s unexpected proposal to rewrite Chile’s constitution triggered a fall in the local stock market on Monday while opponents criticised the government’s plan as inadequate.

Investors fear that Chile’s economic model that has delivered stellar growth in recent decades would be undermined, while members of the opposition and the government’s own coalition warned that the proposals would fail to calm protesters. Chile’s S&P Ipsa benchmark index ended 1.5 per cent lower on Monday.

Karla Rubilar, a government spokeswoman, said on Monday that although the precise method remained to be determined, the government believed “firmly” that congress should lead the process rather than a “constituent assembly”, as protesters have demanded.

Demonstrators, who regard the constitution as illegitimate owing to its origins in the 1973-90 military dictatorship of General Augusto Pinochet, have been demonstrating for more than three weeks over inequality, the high cost of living and a crisis in the country’s institutions.

Many see congress as one of the institutions whose credibility has been most damaged in recent years after a series of corruption scandals stained representatives of parties across the political spectrum.

Mr Piñera told the Financial Times in a recent interview that changes to the constitution had to be made “within the boundaries of our democracy and our institutions”. If not, “we would be undermining the very foundations of democracy and the rule of law”.

Apart from changes to the constitution, the government has introduced a social package, costing at least $1.5bn, that includes increasing pensions and minimum wages, and subsidising medicines and electricity prices.

At least 20 people have died in the unrest, with several killed by the police and the military. Businesses have suffered damage totalling billions of dollars and Santiago’s public transport system has been hobbled because of arson, vandalism and looting.

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