Chilean president accused of cooking poverty data

Associated Press
FILE - In this file combo of two photos taken in June 2012, shows Rodrigo Contreras, left, and his neighbor Juan Carlos Mena, who are both unemployed, living in El Penon, a camp created by people who do not own land but who build their homes there, in the Puente Alto sector of Santiago, Chile, and at right a gardener sweeps the sidewalk outside an upscale home in Santiago's La Dehesa neighborhood. The efforts of Chile's President Sebastian Pinera to squeeze political advantage from his campaign to reduce poverty have backfired, opening him up to accusations that he distorted statistics to show progress on a campaign promise.  (AP Photo/Victor Ruiz Caballero, File)
.

View gallery

SANTIAGO, Chile (AP) — The Chilean president's efforts to squeeze political advantage from his campaign to reduce poverty have backfired, opening him up to accusations that he distorted statistics to show progress on a campaign promise.

No one can deny that President Sebastian Pinera has made real efforts to combat poverty, fostering job creation and providing cash handouts to the poorest Chileans.

But his claim that his government has lifted one of every four people out of extreme poverty led to an embarrassing clash with a prestigious U.N. agency, which publicly distanced itself from the government's numbers. Doubts grew as well because officials let 49 days pass before explaining on Friday how they calculated the figures for the once-every-three-years household income survey.

Pinera himself had ratcheted up the pressure in May when he reiterated his campaign promise to defeat extreme poverty before he leaves office in 2014.

And so when the preliminary numbers arrived in July, he made them a cause for celebration. Presenting charts and graphics, he said that extreme poverty had dropped from 3.7 percent in 2009 to 2.8 percent in 2011 and that overall poverty had fallen from a stubborn 15.1 percent to 14.4 percent of Chile's 16.5 million people.

"It's very good news," Pinera said then.

He was still celebrating weeks later, claiming the numbers show he turned around a country in decline. "I know that it bothers some that a center-right government shows advances in things like equality of opportunity (and) the fight against poverty," he told a group of small business owners.

But Pinera spent much of the Chilean winter trying to fend off questions from economists, congressmen and reporters about how reliable the statistics were.

Pinera and his backers insisted the numbers were certified by the United Nations' Economic Commission for Latin America and the Caribbean, a prestigious organization that has been helping Chile's social development ministry crunch its statistics since 1987. The Santiago-based commission does this for no other country, and its stamp of approval has been a major confidence-builder for investors in a region as volatile as Latin America.

"The great guarantor of the data is ECLAC, an institution respected by all," Social Development Minister Joaquin Lavin said as suspicions mounted.

But the technical details finally released Friday night said the error margin was 0.82 percentage points. In other words, rigorous mathematicians would insist the gains Pinera has been boasting about for weeks are statistically insignificant: While it's possible poverty dropped as low as 13.6 percent of the population, it's also possible poverty actually increased to 15.2 percent.

Pinera certainly knows his way around numbers: He earned a master's and doctorate in economics at Harvard University, and taught the subject for 17 years at Chilean universities while growing a fortune of more than $2.4 billion by introducing credit cards to Chile and building LAN Airlines into a regional power.

A scandal blew up after local reporters showed he had insisted on announcing the numbers as a victory despite reportedly being warned personally beforehand by the U.N. agency's top liaison with the government on the survey, Juan Carlos Feres, that the gain was insignificant.

"What we have here is an ethical problem," said Andres Velasco, a likely center-left candidate in the next presidential election.

Other revelations cast still more doubt on other aspects of the survey.

Critics complained that the survey was taken the same month the government handed out a one-time bonus of 10,000 pesos ($21), making monthly incomes appear higher than usual.

And when ECLAC privately told the presidency that preliminary results showed poverty still stuck at 15 percent, three government officials insisted on including new factors to bring the numbers down, such as a question about whether unemployed people had received any income in the previous month. Chilean officials had never before insisted on changes after the U.N. economists reviewed the results, ECLAC said.

"What the government later presented is not what ECLAC had turned in. This is very serious. This has never happened before. There are approximately 125,000 people the government removed with a stroke of a pen," Velasco complained.

The UN economists kept their silence for weeks before issuing an unusually strong statement distancing themselves from attempts to use their luster to either put a shine on Chile's numbers or attack them.

The agency "laments how its institutional prestige has been used in the debates that have occurred since these poverty figures were divulged by the ministry, and will revise the continuity of this collaboration," the statement concluded.

ECLAC's executive secretary, Antonio Prado, belatedly clarified that the commission later agreed to the government's changes, reasoning the new questions captured the same kind of income that other questions had addressed in 2009.

Prado also noted that because of ECLAC's own changes in methodology used across the region since 2007, its poverty numbers for Chile are even lower, showing a drop from 11.5 percent in 2009 to 10.4 percent in 2012.

Pinera dismissed the criticism again last week, telling reporters that it's more important to "look at reality."

"Technically this survey is well done, doesn't have problems and is comparable with earlier surveys," he argued.

All governments want to show their economies are improving, but the numbers game is particularly important to Chile because its society yearns to shake off its Third World image and be seen as a developed nation. Its membership in the Organization for Economic Cooperation and Development, which includes 34 of the world's leading economies, is a point of pride for Chile's business elite. Mexico is the only other member in Latin America.

But in the slums around Santiago, many feel it would take a miracle to make significant dents in poverty — a line Chile sets at just $147 a month per person. Extreme poverty is defined as incomes of $74 a month or less.

The definition makes Olga Riquelme comparatively wealthy among her fellow slum dwellers in the Campamiento Juan Pablo II, a sprawling collection of wood shacks that lack running water and sewage systems but have a perfect view of elegant mansions and soaring skyscrapers in Los Condes, just across a wide avenue.

Between her maid's salary and her husband's work in construction, they make $715 a month, which puts their family of four just above poverty.

"I would like to be one of the lucky ones," Riquelme said. "But that will never be unless I win the lottery."

View Comments