Chilean president accused of cooking poverty data

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. Social Development Minister Joaquin Lavin said as suspicions mounted. But the technical details finally released Friday night said the error margin was 0.8 percentage point. In other words, rigorous mathematicians would insist that the gains he's been boasting about for weeks are statistically insignificant. 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...Velasco, who was former President Michelle Bachelet's finance secretary, said the survey was taken the same month the government handed out a major one-time bonus, so people's monthly income was higher than usual...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 put a shine on Chile's numbers. In an unusually strong statement last week, the commission said it would not use the government's numbers in its regional reports, because doing so would make comparisons impossible now that the methodology has changed. 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. 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...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."