Chile’s entire economic team resigns after row with Bachelet over Dominga mining project

SANTIAGO – President Michelle Bachelet’s entire economic team resigned Thursday, in a major blow to South America’s wealthiest and most stable nation just three months before key presidential election.

Finance Minister Rodrigo Valdes, his deputy Alejandro Micco and Economy Minister Luis Carlos Cespedes all resigned after the cabinet split over a decision to block a $2.5 billion iron-ore project, Andes Iron, in northern Coquimbo region for environmental reasons.

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All three complained about the haste with which the decision was taken, while President Michelle Bachelet publicly supported Environment Minister Marcelo Mena in opposing the project which was near a protected area where endangered Humboldt penguins breed.

“A sustained advance to faster levels of growth requires discipline and government commitment and the opening of new spaces where the private sector can use its initiative with clear and stable rules,” Valdes told reporters upon resigning. “But I didn’t manage to get everyone to share that conviction.”

Valdes, third finance minister to quit under Bachelet, was replaced by chief of staff Nicolas Eyzaguirre, himself a former finance minister, while Cespedes was replaced by Jorge Rodriguez, the head of the government bank BancoEstado.

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The dispute over the Dominga iron-ore project has laid bare the deep divisions within Bachelet’s administration. Whereas Bachelet has focused on social justice and redistributing wealth, Valdes had stressed the need to revive investment amid the slowest four years of growth since the early 1980s.

His departure will make a victory for the ruling coalition’s candidate in November’s election , in which Bachelet is not running for re-election.

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The election front-runner is conservative billionaire Sebastian Pinera, who is seeking a second term in office. Pinera was president from 2010-2014, taking over just after Bachelet’s first 2006-2010 term.