Theme: Chile’s process of State reform has made progress in many spheres of the public administration; however, the modernisation of the Ministry of Defence is still pending, partly due to a heated internal political debate.

Summary: Like other Latin American countries, some years ago Chile began implementing reforms to transfer private management techniques to the public sector, in order to enhance the provision of State goods and services so as to better meet citizens’ needs. So far, the country seems to have obtained good results from some of the management initiatives it has implemented. However, Defence is still only half-way down the road to administrative reform, due to the difficulties in reaching a consensus over questions that are still pending reform, further compounded by the sector’s specific nature (in which not just any kind of reform will do), making it distinct from other State-run activities. Although integral change in the administration of National Defence is still pending in Chile, it should be highlighted that a number of topics for political debate have been raised, which may be a first step towards modernisation.

Analysis

The Political Context of Modernisation
With a backdrop of economic crises and political instability, many Latin American countries which had implemented a package of State reforms in the 1990s were forced to rethink the idea of a minimal State and fiscal discipline as pillars of modernisation, to start rebuilding democratic institutions and meet the increasing demands of their citizens. Accordingly, a ‘second generation of reforms’ was devised, based on introducing management techniques from the private sector in order to boost efficacy and efficiency in the public sector. This second wave was an improvement on the previous set of reforms, among other reasons because it recognised that the market could not play the political role which legitimately corresponds to the State, and it understood that efficacy and efficiency are not achieved only through the macroeconomic sphere but also with public policies aimed at enhancing human development.

In this regional context, Chile began implementing a set of management measures in 2000, via the State Reform and Modernisation Project (PRYME), which became a permanent body within the General Secretariat of the Presidency, in order to modernise and incorporate information technology to improve public management. This process also impacted favourably on citizens, and helped enhance standards of administrative management; but success was not a matter of chance: buoyant economic growth and institutional stability constituted the ideal framework in which to implement long-term administrative management.

Furthermore, continuity in the government’s line of policy enabled it to maintain the programmes and further pursue reforms, which normally require years of effort to see the first stable results, and a budget worthy of a developed country to achieve them. Both conditions were met in Chile, firstly because public policies established in previous administrations were upheld, and secondly because successive budgets were provisioned for the administrative management projects and policies, and because the Inter-American Development Bank (IDB) lent its financial support to specific programmes.

This approach has been pursued even further recently: President Bachelet reasserted her commitment to modernising the State structure by announcing in November 2006 an ‘agenda of probity, transparency and modernisation’ in the management of the State. The agenda sets forth specific measures to ensure the constitutional principle of transparency, the imposition of a new system to select senior public management in order to professionalise the civil service, the introduction of supervisory measures such as internal auditing of the government, and regulation and absolute transparency in financial management. The Head of State thereby ensures the permanence of the reforms as part of State policy, but can also optimise any favourable results of management and transparency indices as an achievement of the governing coalition.

Until 2005, modernisation was implemented in many State bodies via specific programmes for key administrative areas, mainly pertaining to customer care and results-based management. However, the ‘managerial style’ did not prosper in the area of Defence. There were two main difficulties in implementing new management methodologies: first, unlike other State bodies, Defence in Chile is still burdened by the collective image it conjures up of the repression of the years of dictatorship. As a result, despite its democratic institutions, it is clear that the slate is not yet clean; this was made evident, for example, by the division in society during the funeral of General Pinochet.

At another level, the very structure of the Ministry itself hampers implementation of some techniques, such as outsourcing specific services, since National Defence cannot be channelled like a service industry towards a civilian body or private company. This means that some of the measures regularly implemented under administrative reform cannot be transferred automatically into the Defence area. In Health or Education, privatisation of the provision of certain goods or services under State supervision is a solution to the difficult issue of meeting citizens’ demands, because of the possibility of finding better management solutions at private corporations. In the case of Defence, not only in Chile but also in the rest of the world’s democratic countries, outsourcing is linked only to the procurement of military supplies, the military industry or consultancy; if it were assigned to a private company, this would mean relegating the political role of the State and aligning the administration of the sector with what would be a private military company. Consequently, given the area’s complexity, it deserves a special mention, considering its specific properties and the political context of each country. Some initiatives, such as results-based management, the digitalisation of administrative processes and procedures or management supervision may be feasible, while privatisation or viewing the citizen as a client, are infinitely more controversial.

The Reform of National Defence: Consolidating Civilian Command, Transforming the Ministerial Structure
Without neglecting these contextual factors when considering the Defence area’s reform, the country is showing political coherence in its approach to modernisation. Within this framework, Bachelet’s commitment is to direct the sector’s modernisation based on strengthening political leadership in the definition and management of Defence. ‘Consolidating political command’ means, in specific terms, managing Defence from the executive power, with the Minister’s cooperation, while affording the armed forces with a more or less technical and consultancy-related role.

At a seminar on the modernisation of the State and the Defence sector, held in 2003 at the University of Chile, Bachelet announced that her main objectives would be to recover the value of the armed forces and the Ministry as a joint entity, revise the mechanisms for assigning resources set forth in the Copper Law, achieve effective modernisation of the pensions system for the armed forces and national police (carabineros) and make headway in enforcing the equality of opportunities for women in Defence, among other significant points. Despite the variety of measures announced by the then Defence Minister, public opinion in Chile insists mainly on the issue of procurements as being at the heart of this debate. Consequently, so far the longest delays have been in formulating an exhaustive procurements policy, defined by the ministerial authority and not as an independent requirement for each of the services.

The heated public debate on procurements falls within the framework of the need to democratise and, therefore, to ‘politicise’ the Defence agenda, sidelining the idea that it is a matter solely for the military and at the same time trying to overcome the distrust which sometimes emerges between political and military circles during decision-making and management processes. One of the thorniest issues for public debate is the destination of the funds from the Reserved Copper Law. This Law, enacted in 1958, distributes 10% of copper revenues among the three armed services with the purpose of maintaining and boosting military supplies. Evidently, it was created in quite another political era at the both domestic and international levels, but it has not yet been adapted to the current context. Consequently, the first bone of contention is that procurements are not guided by Defence policy. Although the 2002 Defence Book still conveys a classic vision of National Defence, which might justify the need to modernise and promote the procurement of military supplies permanently, Chile’s good relations with neighbouring countries, plus greater world-wide attention to the emergence of asymmetrical conflicts in the light of the lower proportion of ‘traditional’ wars, creates an obvious contradiction.

Furthermore, this Law could counterbalance the efforts to consolidate political leadership in the Defence area, since it envisages that the military should define its needs in terms of procurement and maintenance without joint planning within the armed forces, and without a policy defined by the Executive with the advice of the Minister and Chile’s Joint Chiefs of Staff. On the first point, under the previous Minister, Jaime Ravinet, work commenced to assess the procurements made under the Copper Law, by implementing a System for the Evaluation of Defence Investment Projects, which began in 2005 with the joint planning of armed forces development. This system employs the managerial methodology of project management, by inviting the armed forces to present their requirements in the form of projects which justify their procurement and the procedures involved, as well as a proposal to meet capacity requirements. Approval of the use of resources depends ultimately on the President, but prior evaluation stages are carried out by a specialist team from the Ministry.

The reform is a significant step in that it enhances the transparency of the internal processes of procurement and maintenance of material, empowering the Ministry’s technical experts to evaluate projects; however, long-term joint planning is still pending. It is clear that if Defence policy is defined as a public policy, the percentage and proposed use of the revenues from the Copper Law must be the result of negotiations and the prioritisation of needs, as with any other policy within the framework of a democratic State.

A last important point is that the modernisation of military supplies is looked upon with distrust by other international players and this can generate a negative image of Chile abroad, especially within the region. The idea of a country committed to peace missions and international cooperation, which does not, at least in the short term, face any real threats to its security but nevertheless has state-of-the-art weapons and technology, at first glance looks like something of a contradiction. One’s first instinct might be to fear a steady militarisation in a regional context which seems to be moving precisely in that direction, as made evident by Venezuela, among others. However, over time the coherence of its procurements policy could offset this image, since despite the still pending public debate, Chile has shown no hostility to other nations and neither has it begun an arms race overnight.

Nevertheless, as Bachelet said at the seminar in 2003, the matter of procurements is not the only urgent item on the agenda; there are other questions in terms of modernisation, which are necessary to integrate a wide-reaching reform to optimise management, take into account the sector’s specific characteristics, work on the political context and generate a democratic and effective response to the challenges posed on the international stage. In this regard, there is a second debate in Chile, in regard to the transformation of the sector via an integrated plan, involving administrative restructuring, removing the overlapping of public departments and also boosting the decision-making capacity of ministerial authorities.

The result of this debate was a draft bill signed by former President Lagos in 2005 which proposed the Ministry’s structural modernisation, with the main aim of strengthening presidential and ministerial authority in managing government processes. Among the most significant changes, the bill proposes to create an Office of the Joint Chiefs of Staff to replace the Defence Chiefs of Staff as the Minister’s working and advisory body in matters relating to the preparation and joint use of the armed forces. Furthermore, the aim is to redesign the organisational structure of the Undersecretariats, so as to avoid overlapping tasks, make progress in joint planning and speed up management processes. Accordingly, the Undersecretariats of War, the Navy and the Air Force and the Ministry’s Administrative Directorate would be removed and replaced by two new departments: the Undersecretariat of Defence and the Undersecretariat for the Armed Forces. The former would prepare policies and plans for the sector and the latter would perform the tasks of the three old Undersecretariats in managing all questions and processes which the armed forces require to fulfil their tasks.

Although the draft bill presented to Parliament is still being processed, it manages to crystallise some of the government’s aspirations in respect of administrative modernisation and the need to foster the greater accountability of the armed forces to the political authorities and to society. A significant portion of public opinion is critical of the independence of the military in terms of defining the objectives, plans and requirements for Defence and, at the same time, civil servants at the Ministry are meeting with certain managerial obstacles, due precisely to the armed forces’ relative independence of the central administration. If the law were to be enacted, both these conflictive issues would be resolved, since all the reforms are aimed at transferring political responsibility and strategic planning to the Minister, who will act with the cooperation of the armed forces. This would certainly imply reducing the power of the military, which in all instances will have to submit to the Minister for planning sector policies and carry out only secondary planning in relation to the procurement of military supplies and the administration of matters falling within their responsibility.

Finally, a third matter for public debate is the modernisation of compulsory military service. The definition of new objectives, equal access to military service and an effective incentives formula are as yet unresolved issues. Most people think that this system has become an obstacle in terms of the employment and educational outlook for the middle and upper classes and, at the same time, the need for employment or qualifications are the main motivation for completing military service for the young from low income sectors and rural areas. As a result, conscription could start to lose its patriotic sense and gradually become a basic training system for the most marginalised sectors of society.

The maintenance of compulsory military service as a recruitment system was justified by the vulnerability of the country’s geographical layout and its strategic defence options, with most conflict hypotheses requiring a significant territorial deployment. This is why most youngsters performing their military service are sent to remote areas and involved in army service, and many of the yearly contingents are trained as infantry. However, the new challenges in international security, the inequality of access to military service among young people and the high costs of its maintenance are specific reasons for a reform.

In 2000, public debate led to the holding of a national forum involving civilian organisations as well as State institutions and the armed forces. The exchange of opinions was resumed one year later for the purposes of the draft bill for modernisation of compulsory military service, whose aim is to promote voluntary recruitment. Without modifying the compulsory nature of military service as set forth in Article 22 of Chile’s Constitution, the aim is to foster voluntary recruitment by attempting to make the draft a subsidiary channel. The project seeks to improve ways to encourage people to present themselves as volunteers, and to establish the universal draft merely as a means of making up the necessary numbers.

Despite the planned achievements in terms of volunteer recruitment, they do not resolve the problem posed by public opinion. The poorest young people are still the first to enter the armed forces, in search of better prospects, and this, among other things, might make conscription a social service which is a far cry from the military vocation. Yet so far there are no prospects for a radical transformation of the system, since as the President herself said in regard to the forum’s conclusions: ‘Neither conditions nor resources are yet sufficient to have a professional army’.

Conclusions: The debate over the Copper Law, the modernisation of ministerial management and a new military service system are at the top of the list of questions pending for the current government to achieve an effective administrative reform as regards Defence. Nevertheless, the favourable outcome of the managerial experiences in other public departments at the national level bode well for Defence, even if the measures already implemented elsewhere cannot be exactly replicated.

While there has been no qualitative change in the administration of Defence, it is at least significant that it has come to the forefront of public debate and is a priority for the government. Accordingly, perhaps it is a question of time and consensus before the vanguard of managerial reforms (hitherto so infrequent in Latin American countries) is introduced in the sector.