Chile magnate may oust left, fights Pinochet ghost

SANTIAGO (Reuters) - A conservative billionaire had a paper-thin lead heading into Chile's presidential election on Sunday as he bids to end 20 years of centre-left rule, but is wrestling with the ghost of former dictator Augusto Pinochet.

Airline magnate Sebastian Pinera is seen narrowly beating Eduardo Frei, a former president from the leftist bloc that has governed the world's top copper producer since the end of Pinochet's 1973-1990 dictatorship.

A win by Harvard-trained economist Pinera would mark a shift to the right in a region dominated by leftist rulers from Venezuela to Argentina, although no major changes to economic policy are expected whoever wins.

Many Chileans are disenchanted with the ruling centre-left "Concertacion" coalition and say the government could have made better use of billions of dollars in copper boom savings. They are also fed up that an old guard dominates politics.

Chileans voted from the dusty mining towns of the arid north to the icy fjords of Patagonia on Sunday. Polls are due to shut from around 4 p.m. (7 p.m. British time), with the first official results expected to trickle in after 6 p.m. (9 p.m. British time)

"We have had four Concertacion governments. We need change," said retiree Braulio Munoz, 59.

To see a Reuters insider story on the election, please click here: http://link.reuters.com/cyj83h

A MORI poll on Wednesday showed Pinera winning the run-off with 50.9 percent of the vote, against 49.1 percent for Frei -- well within a 3 percentage point margin of error.

Pinera, ranked No. 701 on Forbes' global list of the world's richest individuals, won 44 percent in the December 13 first-round vote, while Frei took 29.6 percent. It was the first time the right outpolled the left in a presidential vote since Chile returned to democracy in 1990.

With the field narrowed, both Frei and Pinera scrambled to woo the supporters of a maverick independent who divided the left, polled third with 20 percent and missed the run-off.

NAIL-BITING FINISH

Former film producer Marco Enriquez-Ominami finally gave Frei a lukewarm endorsement on Wednesday, and his support could prove a factor in the race, although analysts say it was likely too little, too late.

Pinera, 60, who made his fortune introducing credit cards to Chile and has a major stake in flagship airline LAN, has benefited from divisions in the ruling coalition.

He has also sought to distance himself from the bloody legacy of Pinochet's rule, when more than 3,000 people were killed or "disappeared" and about 28,000 people were tortured, and has reached out to the large middle class.

Still, one of his brothers was a minister under Pinochet, some of his aides worked for the dictatorship and he has found himself on the defensive as Frei has cast the right as the former strongman's heirs.

Some analysts wonder if a Pinochet fear factor could help swing the vote in Frei's favour.

Pinera has vowed to give Chile's state-owned enterprises an overhaul to boost efficiency, promising to create a million jobs and boost economic growth to average 6 percent a year after a contraction in 2009 in the first recession since the Asian crisis a decade ago.

His critics say his plan depends too heavily on the private sector generating jobs and banks on a steady global recovery maintaining copper demand. Pinera could also struggle to push reforms through a divided Congress.

"After 20 years I think a change will be good for Chile. It's like opening the windows of your home to let fresh air come in," Pinera told reporters early on Sunday.

Pinera is the market favourite, and analysts forecast a win would give extra momentum in the near term to a stock market rally continuing from 2009 on a recovery from global crisis and sharp price gains for the main export, copper.

Frei, whose 1994-2000 presidency was shaken by recession, vows to continue with popular President Michelle Bachelet's welfare policies and says his priorities include labour reform.

He has also adopted several of leftist Enriquez-Ominami's policies, vowing to overhaul the tax system and boost revenue from mining royalties, and some investors are wary about how far Frei will go to accommodate him.

He has also sought to revive memories of the right's support for Pinochet.

"They've talked a lot about change, but change to what? They've also talked a lot about how it's their turn," Frei said on Sunday. "They were also in power for 17 years (in the dictatorship) and Chile can compare freely.

(Additional reporting by Alonso Soto, Rodrigo Martinez, Antonio de la Jara, Aaron Nelsen, Alvaro Tapia, Juana Casas; editing by Eric Beech)

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