Chile has Latin America’s best-rated credit and one of its most prosperous economies. Yet popular anger at government policies has been brewing for a long time among people frustrated with income inequality and a weak social safety net, including low pensions. A 30-peso ($.04) increase in the price of a subway ticket set off the worst civil unrest since the country returned to democracy in 1990. President Sebastian Pinera declared a state of emergency and called in troops. He also quickly withdrew the proposed fare hike. The state of emergency has now passed but marches and protests continue, and a return to normality may take a long time.

1. What started the protests?

On Oct. 6, Metro de Santiago, the capital’s subway operator, raised the price of its tickets to as much as 830 pesos (about $1.15) during peak hours -- just weeks after the government announced a 10% hike in electricity bills. Public anger mounted after Economy Minister Juan Andres Fontaine suggested workers should just get up earlier if they didn’t want to pay higher prices. (A study this year showed many people in Santiago face commutes as long as two hours.) On Oct. 18, a student-led protest against the fare hike spiraled into arson and looting. Further protests and damage to public transport caused widespread disruption in cities across the country. On Oct. 25, more than a million people marched through Santiago in one of the biggest street protests the country has ever seen.

2. Who’s leading the protests?

Nobody, which is what makes them so hard to handle. The movement that has taken to the streets of major cities across Chile is leaderless and largely organized on social media. There is no one for the government to sit down with for talks. Protesters ranging from disgruntled bourgeoisie to black-clad anarchists quickly started to vent their anger at Chile’s elite, its politicians and the free-market economic model that has produced vast wealth and lifted millions from poverty but left many struggling to get by.

3. What’s Pinera’s plan?

The government initially tackled the violence as a law-and-order issue, an approach that only made things worse. However, in a televised address on Oct. 22, President Pinera apologized for having failed to recognize the genuine grievances behind the protests and set out a new social agenda. He proposed raising the top rate of income tax, boosting pensions and introducing a minimum guaranteed monthly income of 350,000 pesos. He also said the government was working on insurance to mitigate health costs, would seek to lower the price of medicines and freeze increases in electricity tariffs. He also promised to lower salaries for lawmakers, cut their number and limit re-election. On Oct. 29, he replaced eight cabinet ministers. Meanwhile, the government has estimated the cost of damage at between $2 billion and $3 billion. On Nov. 10, Pinera appeared to cede to another key demand of protesters as his government proposed a mechanism to write a new constitution.

4. How did this happen?

Chile, a country of about 18 million people, has been one of the fastest-growing in the region for years, according to the World Bank. While the country has made great strides in reducing poverty in recent decades, many Chileans are deeply indebted, and the level of income inequality is one of the highest in the Organization for Economic Cooperation and Development, a club of 36, mostly rich countries. Household debt is rising and the savings rate is falling, while unemployment and pension payments are at the low end of the scale among the world’s wealthy nations. At the same time, political parties have done a poor job of channeling discontent. Chileans have the lowest levels of civic engagement in the OECD, according to the organization’s so-called Better Life Index, and mainstream parties have seen their support decline.

(An earlier version of this story corrected number of OECD countries.)

To contact the reporter on this story: Sebastian Boyd in Santiago at sboyd9@bloomberg.net

To contact the editors responsible for this story: Eric J. Weiner at eweiner12@bloomberg.net, Philip Sanders

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