Original article: «Chile está quebrado»: Las interpretaciones de la narrativa kastiana y la crisis de combustible
By Leopoldo Lavín Mujica
A troubling thesis: why defend a model manipulated to their liking?
Beyond the current situation, what’s at stake is the kind of relationship this government wishes to establish with the Chilean economic model. Is it aiming to manage it, correct it, or confront it? So far, the signals have been contradictory: an agenda that appears orthodox economically, yet a narrative that strains its foundations.
This incident carries a broader lesson that transcends Kast’s government. The reaction of the economic establishment—defending the model’s credibility against a declaration of «bankruptcy»—highlights that this model is not a set of objective and immutable rules, but a web that the right and business power manipulate as it suits them.
They defended it when it came to not touching the profits of large companies; they defended it to prevent state intervention to cushion the blow for families; and they defend it now when a political statement threatened to erode the asset that allows them to continue accumulating wealth at the top.
The question that should dominate the public debate is not whether Kast or his advisers were wrong to declare bankruptcy, but why we continue to defend a model—the same one manipulated by the right and economic power—that, in every crisis, concentrates wealth in the 1% richest (including large oil companies) while socializing costs among the middle and lower classes.
The «Chile Sale Adelante» plan provides partial relief to some sectors but does not challenge this underlying structure. With its targeted measures, Kast’s government attempts to demonstrate action without altering its ideological conviction that the market should operate unrestrained. And when it pushed that logic to the extreme by declaring the country «bankrupt,» the very economic power that benefits from the system reminded them of their limits.
The Neoliberal Strategy: Creating Crises to Govern by Decree
This bears repeating insistently. The situation with fuels is not an isolated incident. It responds to a deeper logic theorized by various critical thinkers of neoliberalism.
As historian Quinn Slobodian notes in Globalists (2018), «far from discarding the regulatory state, neoliberals wanted to harness it for their grand project of protecting capitalism on a global scale.»
This is not about expanding people’s freedoms, but guaranteeing the economic freedom of capital. To achieve this, they utilize the state—similar to Kast’s government—with two simultaneous purposes: attacking the collective rights of workers and deregulating in favor of businesses.
This strategy aligns with what Naomi Klein, in The Shock Doctrine (2007), terms «disaster capitalism»: exploiting crises—some constructed through media—to implement reforms that would normally encounter social resistance.
The declaration that «Chile is bankrupt» was precisely that: an attempt to instill the idea that the country faced a crisis of such magnitude that it justified not intervening to ease fuel prices, thereby protecting fiscal balance while large oil companies and the richest 1% reaped extraordinary profits.
But the strategy goes beyond discourse. In times of “emergency” or “crisis,” the government seeks to act through unilateral decrees and executive decisions. This mode of governance evokes the theory from German jurist Carl Schmitt, who argued that, in a state of exception, the sovereign must impose decrees, suspending normative order in the name of urgency.
Although Kast’s government has not formally declared a state of constitutional exception, its modus operandi—withdrawing pending bills, applying administrative decrees with economic impact without prior consultation, and constructing a narrative of fiscal emergency to justify measures that benefit big capital—replicates this logic: governing by decree, without checks, appealing to a crisis they exacerbate themselves.
As philosopher Barbara Stiegler points out in Il faut s’adapter (2019), “neoliberalism resorts to the artifices of the state (manipulating law, education, and social protection) to transform the human species (which must adapt) and thereby artificially construct the market.” In other words: there is no “natural” market that the state must free; the market is created by the state, and neoliberalism uses it to shape society in favor of capital.
Data the Government Prefers to Ignore: Oil Companies and the 1% Profit from the Crisis
While Chile debated whether the country was indeed “bankrupt,” international evidence presented a very different reality: the global energy crisis had turned into a massive income transfer from consumers to large corporations and the wealthiest strata.
A report from U.S. consultancy Rystad Energy estimates that if the price of crude averages $100 per barrel through the rest of 2026—a scenario analysts don’t dismiss—only five of the leading shale oil producers in the United States (BP, Chevron, ConocoPhillips, ExxonMobil, and Shell) would generate an additional $162 billion in earnings compared to a scenario with a $70 barrel, the level prior to the onset of the Iran war. These are the same firms that funded D. Trump’s election.
From January 1 to March 24, Brent crude prices soared by more than 70%, and in the United States, the average price of gasoline approached $4 per gallon, when a month earlier it was below $3. The White House attempted to frame the increase as “good news for the economy”—in a message on X that needed clarification later—but the reality told a different story: extraordinary wealth concentration.
A study by economists Gregor Semieniuk and Isabella Weber documents that in the United States, 50% of the profits generated by fossil fuels are concentrated in the 1% of the wealthiest households. Conversely, the bottom 50%—66 million households—receives only 1% of these profits. The top is even more telling: the richest 0.1% (around 131,000 families) gains 26 times more than the poorer half of the country.
The “Chile Sale Adelante” Plan: Targeted Reliefs Without Touching the Core of the Model
In Chile, Kast’s government faced social pressure with a package of measures announced on March 23. The plan included freezing public transport fares in Santiago and reallocating resources to avoid price increases in regions; freezing the price of kerosene during autumn and winter alongside a project to expand its stabilization fund; monthly bonuses of $100,000 for up to six months for basic taxis and collective transport; a preferential credit line from BancoEstado for transitioning to electric mobility; security measures for freight transport; and the temporary suspension of differentiated tax credit for non-transport companies.
However, the government maintained a core decision: not to use the Fuel Price Stabilization Mechanism (MEPCO) to absorb international increases, allowing gasoline and diesel prices to fully reflect external volatility.
This decision, justified by Finance Minister Jorge Quiroz as stemming from a “legacy fiscal constraint,” meant that the cost of the crisis fell directly on consumers.
According to official figures, maintaining price freezing would have had a projected cost of up to $4 billion. President Kast defended the strategy with a fiscal responsibility narrative: “We cannot buy popularity at the expense of money we do not have, getting into debt, only to face the consequences later.”
Minister Quiroz was more explicit: “I’m not here to be popular; I’m not here to gain a candidacy later. I’m here to safeguard public finances, the money of all Chileans.”
The Neoliberal Offensive: Beyond Fuels
Kast’s government strategy, however, does not stop at the fuel crisis. It is part of a broader package of reforms confirming the direction of its project: reducing the corporate tax rate from 27% to 23%, abolishing capital gains tax, and establishing a capital repatriation regime. All while limiting university tuition-free access to those under 30 and halting its expansion to new income deciles.
Simultaneously, it promotes reforms to the Environmental Impact Assessment System (SEIA), reduces timelines for sectoral permits, and expedites maritime concessions under the banner of fighting “permisology.” What some praise as a reduction of the state is, in fact, a transfer of resources from the majority to large capital.
This offensive also extends into labor rights. The government has just withdrawn the branch negotiation law, a key tool for workers to collectively bargain against large employers. Far from expanding freedoms, this measure limits union rights and strengthens the power of “free enterprise”—that is, concentrated capital.
The “virtue” of repealing laws reveals its perverse side: protecting workers in the name of «flexibility.» Under the same “freedom” discourse, Kast’s government curtails the rights of women—to decide about their bodies—and minorities, hindering the abortion law in three circumstances, dismantling diversity and inclusion programs, and promoting an agenda that criminalizes social organizations and communities defending their territories.
This neoreactionary component—seeking to restore traditional hierarchies of gender, family, and authority—completes the project: while neoliberalism deregulates markets, conservatism authoritarianly regulates bodies and dissidence.
“Chile is Bankrupt”: The Narrative That Triggered All Alarms
The government’s communication strategy, however, ended up flooding the economic debate. By implanting the idea that “Chile is bankrupt” to justify a lack of fiscal margin, the Executive produced a cross-cutting reaction. Economists from different sectors, think tanks, former authorities, and actors in the financial world came out to debunk the diagnosis. The finance minister himself had to publicly temper his remarks, revealing an unusual internal disorganization on such a sensitive issue.
Obviously. To say that a country is “bankrupt” equates to stating it cannot meet its financial obligations, that is, it is on the brink of default. None of this is happening in Chile, where the country risk remained stable, and access to credit showed no signs of deterioration.
However, beyond the technical error, what transpired revealed a break with the basic consensus that has sustained the Chilean economy for decades: the defense of macroeconomic stability as a strategic asset. Since the return to democracy, Chile constructed its international reputation on three pillars: fiscal responsibility, respect for market rules, and institutional predictability. This neoliberal model enabled the country to secure funding under favorable conditions, attract foreign investment, and maintain stability in more volatile regional contexts.
The economic establishment reacted immediately, not out of a defense for the previous government, but for the necessity to protect that reputational asset. For the markets, trust is everything. And trust is built on consistency, not contradictory declarations.
Despite their familiar ties, the Kast-Quiroz trick is perilous.
Neoliberalism as the Only Horizon: Progressivism Normalizes It
What has occurred in these past weeks also reveals a more profound political issue. The Chilean neoliberal model, with its logic of wealth concentration and socialization of losses, is not solely sustained by traditional right-wing forces. It is also defended—often unwittingly—by a “neoliberalized progressivism” that, believing that the only way to justify Boric’s government is to maintain fiscal rules and economic orthodoxy intact, ends up validating the very structure that punishes the majority.
This progressivism, caught in the illusion that the model can be managed without transforming it, consequently normalizes the model and proves functional to the right’s strategy.
For when Kast’s government claims “Chile is bankrupt” and that there’s no room for intervention, the response from certain self-identified progressive sectors is not to question the model that generates these restrictions, but to compete to show who is more fiscally responsible. Thus, unwittingly, they legitimize the narrative that there are no alternatives, that the only policy possible is one of adjustment.
Meanwhile, the major economic powers watch with satisfaction. They know that the crisis narrative—even if exaggerated—serves to deepen reforms that benefit concentrated capital: tax cuts, environmental deregulation, labor flexibility, and weakening collective bargaining.
And they also know that they can count on a political spectrum ranging from the right to a segment of progressivism that, fearing supposed “irresponsibility,” prefers not to question the established order.
Defending the Model Means Defending Inequality and the Power of the Business Oligarchy
The fuel crisis has exposed a structure that repeats itself with every external shock: profits are privatized while costs are socialized.
The data from Rystad Energy and the Semieniuk and Weber study are not exceptions, but the rule of a system designed to concentrate wealth at the top. In Chile, the decision not to intervene in internal prices was not an inevitability but a political choice.
Kast’s government had tools available—the MEPCO, targeted subsidies, tax mechanisms—to cushion the impact on families. They chose not to use them, prioritizing fiscal stability over relief for middle and lower sectors. And when they attempted to push that logic to the point of declaring the country “bankrupt,” the very economic power benefiting from the system reminded them of their limits.
The question that pervades this episode is simple: why continue to defend a model that, in every crisis, demonstrates it concentrates gains among the wealthiest 1% while socializing costs among the middle and lower classes?
The international evidence is compelling: rising fuel prices are not an inevitable natural phenomenon but an extraordinary business opportunity for oil companies and the wealthiest investors. In Chile, the decision not to intervene in internal prices has been a political choice that punishes those who have the least the hardest.
Defending a model that the right and business power manipulate to their liking—and that reacts fiercely when anyone threatens to delegitimize it—does not mean defending stability; it means defending inequality. And as long as a segment of progressivism believes that justifying Boric’s government involves not touching the neoliberal rules, it will continue to be functional to a project that, as evidenced by the fuel crisis, only benefits the usual elites.
Leopoldo Lavín Mujica
