The Washington Post
December 9, 1999
New Left Rises in Gap Between Rich and Poor

                  By Anthony Faiola
                  Washington Post Foreign Service
                  Thursday, December 9, 1999; Page A01

                  VILLA HERMOSA, Chile—Second of two articles

                  Cold Patagonian rain drenched the crowd gathered for a political rally in
                  this poverty-stricken pocket of mud roads and wooden huts in southern
                  Chile. A blue-gray Peugeot approached, and applause erupted as a union
                  leader grabbed his makeshift bull horn and shouted: "Here he is! The next
                  president of Chile! The president of the poor! Mr. Ricardo Lagos!"

                  On cue, Lagos, 61, stepped out of the car, exuding confidence. And why
                  not? In a nation long considered an international model of the free market
                  in the developing world, Lagos is the first Socialist Party leader to come
                  this close to the presidency since Salvador Allende was overthrown by the
                  military more than a quarter-century ago. Lagos is in a dead heat with his
                  right-wing opponent in opinion polls looking toward Sunday's presidential

                  As Lagos began his stump speech, it seemed for a moment, just a moment,
                  like old times.

                  "We must end the two Chiles!" he shouted above the cheers that almost
                  reached the neat streets and fine homes of a wealthy neighborhood just
                  across a bridge in this town 40 miles south of Temuco. "No longer can we
                  accept an unjust nation where the rich live comfortably while too many
                  people live in poverty!"

                  But give him a minute, in the more reflective setting of an interview on the
                  way to his next stop, and Lagos will tack on an important caveat.

                  "There is no doubting the free market anymore," said Lagos, who got his
                  PhD in economics from Duke University and speaks fondly of Wall Street.
                  "This is a globalized world where no one can turn back. And anyone who
                  would suggest that in this day and age would be foolish."

                  Lagos, a former dissident who helped lead the popular outcry that ended
                  Gen. Augusto Pinochet's 17-year dictatorship in 1990, is part of a "new
                  left" sweeping across much of Latin America. Sounding like Britain's Prime
                  Minister Tony Blair, a new breed of Latin politicians is preaching an
                  economic "third way"--advocating a move away from the U.S. model of
                  capitalism and toward a greater role for the state in a gentler, but still free

                  These politicians bear little resemblance to the camouflage-clad Ernesto
                  "Che" Guevara disciples who once defined Latin American opposition
                  movements with their Marxist or Maoist doctrines. The leaders of the new
                  left disavow armed struggle championed by figures such as Guevara, an
                  Argentine comrade of Cuban leader Fidel Castro who promised during the
                  1960s to ignite "many Vietnams" across Latin America in the quest of a
                  socialist New World Order. Repression by right-wing governments and
                  armed struggle by leftists cost hundreds of thousands of lives in Latin
                  America in the second half of the century.

                  New Age Radicals

                  But today, with the notable exceptions of old-style guerrilla movements in
                  Colombia and Castro's durable dictatorship in Cuba, the left has largely
                  modernized its line. Even Venezuelan President Hugo Chavez, the most
                  radical new left leader in Latin America and an unapologetic friend and
                  admirer of Castro, has repeatedly said he supports the free market as a
                  tool in his sweeping "democratic revolution," which he says would revive a
                  leading role for the state in lifting up that nation's poor.

                  After a decade in which free-market reforms spread far and wide in Latin
                  America, new left candidates have struck a chord by zeroing in on the
                  failure to create enough new jobs to counter high unemployment rates
                  caused by privatization and downsizing, or to bring equity to a region with
                  the greatest gap between rich and poor in the world.

                  Sensing the turn in popular opinion, the right is also undergoing a political
                  transformation across the region, moving to the center. There is no better
                  example than Lagos's conservative opponent in Chile, Joaquin Lavin, who
                  has dramatically narrowed the gap between them in recent weeks by
                  promising the same focus on poverty championed by Lagos's Socialists.

                  Lavin, a 46-year-old economist and former journalist, has projected a
                  centrist vision with a youthful, down-home delivery and by ditching
                  conservative positions on political issues. Lavin has even voiced support
                  for crusading Chilean Judge Juan Guzman, who has ordered the arrest of
                  dozens of former military and intelligence officers for crimes committed
                  during the dictatorship, and who is now investigating Pinochet while the
                  retired general is under house arrest in London awaiting extradition for a
                  trial in Spain.

                  "You've seen Lavin become more liberal and Lagos become more
                  conservative," said Jane Winslow, vice president of Merrill Lynch & Co. in
                  Santiago. "There are fewer and fewer divisions between the right and the

                  While the race in Chile remains a tossup, the new left has been gaining
                  ground elsewhere. On Oct. 24, neighboring Argentina elected center-left
                  opposition leader Fernando de la Rua to the presidency. A member of the
                  international socialist movement, he has created a cabinet that puts
                  free-market specialists in charge of the economy while naming Argentina's
                  left-leaning matriarch, Graciela Fernandez Meijide, minister of social

                  In Uruguay, the Broad Front of Socialists, Communists and former
                  Tupamaro guerrillas made historic gains in legislative races in October,
                  winning a plurality in both houses of Congress. Their candidate for
                  president, oncologist Tabare Vazquez, won the first round of elections in
                  October, but lost in the Nov. 28 runoff to Jorge Batlle, a moderate liberal.
                  Still, Vazquez received 44 percent of the vote in a nation that had never
                  given the Broad Front more than 30 percent in a presidential election.

                  "The days of the revolution are gone," said Enrique Correa, a
                  Santiago-based political analyst. "If you listen to [the new left], the
                  discourse is anything but radical. It's suggesting an economic fine-tuning,
                  combining the state and the free market to battle Latin America's biggest
                  problems, like inequality. They are problems that the free market alone still
                  hasn't fixed."

                  Although economic reforms have brought widespread benefits, such as the
                  end of hyperinflation, the gap between rich and poor has widened or
                  remained unchanged in every Latin American country that implemented
                  free-market reforms in the 1990s, according to the Inter-American
                  Development Bank. While candidates from the new left tend to play down
                  anything that seems to infringe on the free market, there is more than a
                  touch of Robin Hood in politicians like Lagos.

                  Their pitch is a new "social safety net," with promises to spend more on
                  education, health care and job training. They say the money would come
                  from getting tough on rich tax evaders, tackling corruption and increasing
                  or levying new taxes on private industry. To ease the plight of hundreds of
                  thousands of unemployed workers, for instance, Lagos is suggesting
                  government unemployment insurance and re-training programs to be
                  funded at least in part by the private sector.

                  "We are not poor nations in Latin America," Lagos said. "We are unjust

                  Lagos and other new left politicians here also insist the state must step up
                  regulations and enforcement in newly privatized sectors such as power and
                  water utilities. Throughout Latin America, privatization contracts have
                  become the target of public wrath. Endesa, the Spanish-owned power
                  company in Chile, was widely criticized after it escaped with little more
                  than a slap on the wrist for failure to manage a drought that has caused
                  almost a year of energy shortages in Santiago, the bustling Chilean capital
                  of 7 million.

                  "The state needs to reinsert itself into society," Lagos said. "The private
                  sector cannot just be allowed to operate without supervision, and that is
                  what we see happening now. Even in the United States you see the state
                  playing a stronger role in regulating industry than in Latin America."

                  The new left is also promising an escape from government corruption that
                  has seemingly exploded in the 1990s. For instance, Chavez in Venezuela is
                  embraced as a political outsider by voters who have turned against
                  traditional parties mainly because they see them as rotten.

                  Many of the names associated with free-market reforms have become
                  synonymous with corruption. President Carlos Menem and his Peronist
                  party in Argentina step down this month after 10 years during which the
                  administration oversaw a massive privatization program that became
                  notorious for kickbacks and cronyism. More than 10 of Menem's closest
                  aides were forced to resign or have been indicted in corruption scandals.

                  This has made battling corruption and strengthening the judicial system just
                  as important as fighting poverty and inequality. And the new left, viewed by
                  voters as less beholden to economic interests, is seen as a more honest

                  "The people want an end to the impunity they have seen during these years
                  [of economic reforms], which have taken a high social cost," said de la
                  Rua, who takes office on Friday after a campaign that played up his
                  austere style in contrast to the Ferrari-driving Menem.

                  Shift to Center

                  Conservatives suggest that these social-minded candidates threaten Latin
                  America's struggle to become more competitive globally. Latin America
                  has lost many new jobs to Asia or Eastern Europe, economists say,
                  because the cost of doing business remains too high, especially in South
                  America's more affluent Southern Cone of Argentina, Chile and Uruguay.
                  Critics argue that greater regulations or higher private-sector taxes could
                  drive up the costs of doing business even more.

                  Candidates like Lagos have taken those criticisms to heart, explaining in
                  part his shift to the center. Like de la Rua in Argentina, he has been
                  accused by stauncher leftists of being a sellout. After last year's arrest of
                  Pinochet in England, for instance, Lagos joined those who insisted that the
                  former dictator be brought home to face justice. Although many members
                  of his party now agree with that position, at first he was criticized for taking
                  too lenient a stance.

                  It has not been easy for Lagos. Just as Pinochet staged his coup in 1973,
                  which ended with Allende dead, Lagos had been picked to be ambassador
                  to Moscow. He fled into exile in the United States, briefly teaching at the
                  University of North Carolina and later working for the United Nations.

                  He returned to Chile with a U.N. passport to become a major voice of the
                  dissident movement in the 1980s. He was detained briefly, then in 1988
                  gained international recognition for his challenge to Pinochet during the
                  campaign for a national plebiscite to decide if Pinochet would rule for
                  another six years. On live television, Lagos waved his finger at the
                  camera--and thus at Pinochet--and said Pinochet must be called to
                  account for human rights violations. Soon after, Chilean voters
                  overwhelmingly rejected Pinochet's rule, and the general stepped down in

                  By then, Chile had become the leader of a free-market movement in Latin
                  America, systematically cutting tariffs and privatizing bloated state-run
                  industries. Chile's new democratic government increased social spending
                  but also followed conservative fiscal policies that encouraged investors and
                  led to 15 years of sustained economic growth--broken only by a recession
                  this year.

                  The outcome made Chile one of the few nations in Latin America to cut
                  poverty substantially in the 1990s, slashing the poverty rate to 21.7 percent
                  in 1998, down from 38.6 percent in 1990. As Chile became the free
                  market's star pupil and the benefits of new-found efficiency became
                  obvious, "there was no more denying that the free market worked," Lagos
                  said. "But what we have failed to do is make it more fair for all."

                  For even as poverty dropped, Chile's income gap worsened. The poorest
                  20 percent held 3.7 percent of the national wealth in 1998, compared to
                  4.1 percent in 1990, while the richest 20 percent held 57.3 percent of the
                  wealth in 1998, virtually unchanged from 1990. One reason this happened,
                  analysts say, is that the poor did not receive the education necessary to
                  land jobs that would elevate them into the middle class.

                  In the 1990s, the average number of years of schooling for Chilean
                  children increased overall while remaining stagnant for children of the poor.
                  At the same time, wages for high-tech jobs in telecommunications and
                  computer fields were going up, while those for unskilled labor lagged.

                  On a recent campaign swing, Lagos's message hit home in poor
                  communities. Ervin Rivas, 39, an electrical repairman and father of two in
                  Villa Hermosa, said there have been major improvements in his life during
                  the past 10 years, but his children still do not get the education they need.

                  "We have a television set, we have a VCR, we have a lot of things we
                  never had before, and we're glad for that," he said under the falling rain.

                  "But I don't think we've come as far as we think. I look at the school my
                  kids go to, and I see that not one teacher there has a university education.
                  Then I look at the school [in the richer part of town] and I see teachers
                  with college degrees and computers for the kids to work on.

                  "We need more than TVs in our lives," he said. "We need real change."

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