Ending The Washington Consensus.(International Edition; THE LAST WORD)(Michelle Bachelet)(Interview)

Byline: Michelle Bachelet

After her father was tortured and died in one of Gen. Augusto Pinochet's prisons, Michelle Bachelet endured her own imprisonment and went into exile with her mother. But the pediatrician returned to Chile to devote herself to public service, and after turns as minister of health and defense, she was elected president in 2006. Her polls were down last year, but with much of her program implemented, she is popular again in the final year of her presidency. She spoke with Jimmy Langman in Santiago's La Moneda palace. Excerpts:

NEWSWEEK: How are Chile and Latin America faring in the global economic downturn?

BACHELET: For us, this economic crisis was no surprise. You need strong markets, but the market can not do it alone; this crisis shows the necessary role that state policies must have in overseeing financial markets and economies as a whole. We also need to restructure the Bretton Woods institutions, the IMF and the World Bank, created in a different era. They need not just a new influx of funds, but new strategies and a reform in governance, such as giving more representation to the developing countries they serve. Chile has a sound macroeconomy. When Chilean copper prices were high, we created a countercyclical fund to protect pensions and other social programs. This has powered $4 billion to fuel the economy and create jobs. We expect to create in the coming months around 200,000 new jobs. But the slowdown in worldwide growth will seriously affect the region. [In the future,] we cannot repeat the errors of the Washington consensus, when countries in the region grew and did not redistribute.

Chile has been criticized for the large gap between its rich and its poor. Is the Chilean model in need of reform?

Chile has done a lot to rid itself of poverty, especially extreme poverty, since the return to democracy. But we still have a ways to go toward greater equity. This country does not have a neoliberal economic model anymore. We have put in place a lot of policies that will ensure that economic growth goes hand in hand with social justice. There does not have to be trade-off ...