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
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
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
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
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
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
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
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
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
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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