Right-wing parties' majority in the body helping draft Chile's new constitution may spark leftist protests in the near term, but it will also alleviate concerns about major constitutional changes that could erode the country's investment climate. Right-wing parties won 33 of 51 seats in a May 7 vote to select the assembly charged with drafting a new Chilean constitution, giving them a veto-proof majority in the Constitutional Council. Chile is currently undergoing its second constitutional rewrite process after voters rejected a proposed charter that would have significantly reformed the South American country's political and economic system in a September 2022 referendum. Unlike the first proposed constitution, which was written solely by a popularly elected body, the next iteration will be drafted by both the newly elected council and a group of experts picked by Congress. The inclusion of a panel of experts in the rewrite process, combined with the right-wing's veto power in the Constitutional Council this time around, indicates the final text of the updated charter will almost certainly be more moderate (if not conservative) compared with the left-wing constitution Chileans rejected last year. 

• The far-right Republican Party won 22 seats in the Constitutional Council and the right-wing Chile Seguro won 11. Leftist candidates won the other 17 seats. A 51st seat is reserved for a representative of the country's Indigenous population.
• The group of experts began drafting an outline of a new constitution in March. The Constitutional Council will then work on and potentially add to that basic text, with the goal of producing a final draft by October that Chileans will vote on in December. 
• On Sept. 4, Chilean voters overwhelmingly rejected the document that resulted from the 2021-2022 constitutional rewrite process, with 62% voting to reject and only 38% voting to approve. The rejected 388-article constitution would have eliminated the upper chamber of Chile's federal legislature and given regional governments greater powers by deeming the country ''plurinational.'' It would have also created new public sector institutions for healthcare and education, as well as granted more Indigenous rights and environmental protections.

The constitutional drafting process aims to address widespread social unrest in Chile over a lack of economic opportunities and various political grievances. The outcome of the Constitutional Council vote may thus renew protests among leftist activists. After years of simmering tensions, frustration with the country's growing inequality erupted into mass protests between late 2019 and early 2020. An unprecedented 10% of Chile's population participated in the nationwide demonstrations, with over a million people taking to the streets. One of the protesters' key demands was the creation of a new constitution that enshrined a more comprehensive social safety net for middle- and lower-income Chileans. In an effort to appease demonstrators, then-President Sebastian Pinera agreed in 2020 to begin the process of rewriting the country's constitution. However, last year's rejection of the very leftist document that resulted from this process left many left-wing activists feeling disenchanted. Those activists are now likely to see conservative parties' majority in the new Constitutional Council as further indication that their demands for institutional change will not be fulfilled, raising the risk of renewed unrest. Even if they don't reach the level of the mass demonstrations seen in 2019-2020, such protests could still cause significant disruptions in Chilean cities. There's a chance protests could also be staged in and around extractive industry sites, as locals seek to air their grievances. The risk of unrest will be particularly acute if the right-wing constitutional drafters seek to make changes that enshrine their more hawkish security views and/or their more conservative social views. 

• After Pinera agreed to a referendum to begin a constitutional rewrite process in 2020, 78% of voters voted in favor of writing a new constitution to replace the country's current business-friendly constitution, which entered into force in 1980 under the dictatorship of Augusto Pinochet. It had come to be seen as having fueled economic growth at the expense of broader societal welfare. 
• Leftist collectives and some unions have expressed discontent at the results of the May 7 election, with some calling for protests, though no firm plans or dates have been publicly set.

The far-right's control over the Constitutional Council means it's highly unlikely that the constitutional rewrite process will include significant expansions of the role of the state, which would benefit the investment climate for Chile's extractive industries. The revised constitutional document is scheduled to go to a vote in December 2023. The members of the Constitutional Council cannot recommend fundamental changes to Chile's political system and institutions beyond what the coalition of experts writing the language recommends. They can, however, significantly shape other areas of government, including the role of the state. The council's political makeup means that the body is highly unlikely to push for an expanded state presence in sectors such as health care, the pension system and education that the prior leftist drafters had previously demanded — maintaining private control over these sectors. Additionally, the newly elected drafters are highly likely to keep Chile's current scheme for water and land rights in the constitution, which stipulates that both can be privately-held resources. In combination, these decisions would be a positive sign for Chile's extractive industries, especially its copper mining sector, which has seen significant investor concern over the past years due to the political risk of a new constitutional rewrite potentially disrupting Chile's current concessionary and compliance model. If Chileans approve the new constitution in the December referendum, the country could see renewed investor interest in its copper sector. But even if the new draft is again rejected, President Gabriel Boric's government has signaled that it would not seek a third constitutional rewrite process. This means that the country's current business-friendly constitution would remain in place, which would be similarly beneficial for investors in Chile's extractive industries.

• Leftist President Gabriel Boric, who campaigned on a platform to rewrite the constitution, has vowed not to attempt a third constitutional rewrite process if the current rewrite fails in an eventual popular referendum. This is thus likely the last opportunity the Boric government has to implement constitutional changes. 
• Chile's current constitution ensures that almost every mineral or subsistence is available for private concessions. But the first failed constitutional rewrite planned to leave the concession model to be determined by legislation. The uncertainty around Chile's extractive industries spooked investors, as laws could have been subject to different interpretations and future changes. 
• Following the May 7 vote, the Chilean peso rose as much as 1.3%, while stocks benchmark S&P IPSA CLP rallied 2.6% to a near eight-month high.