Lula and Elisa reach for power

While the left is beating a retreat in western Europe, it is gaining ground in Latin America. But, o

In a reverse image of western Europe, Latin America is moving to the left. In election campaigns that are pending in several of the states, leftist or populist candidates top the polls, buoyed by an apparent failure of "neoliberal" economic programmes widely adopted in the Eighties and Nineties. The movement, though, smacks more of desperation than of hope: it stems from a political more than an economic failure, which the move to the left may worsen.

The most vivid victory for the left would be in Latin America's largest state, Brazil. The candidate of the leftist Partido dos Trabalhadores (PT) is Luiz Inacio da Silva, known throughout Brazil and beyond as "Lula". He is revered by his followers, who have supported him through three previous attempts to win the presidency. When I attended the first of the World Social Forums in the Brazilian city of Porto Alegre early last year, Lula put in a guest appearance and could barely move for the crowds that formed about him and who cheered his feel-good, meaningless speech.

A former metal worker, he created the PT less than three decades ago, and has led it to victory in city and regional elections. PT governors and councillors have shown - rather like the old Communist Party of Italy - that they can govern relatively efficiently and honestly in a country where these virtues have always been rare. The outgoing president, Fernando Henrique Cardoso, a former Marxist sociologist, has embraced capitalism and prudence and has presided over a long period of growth and fiscal rectitude - going so far as to pass a fiscal responsibility law that prohibits spending above a certain level, a measure the PT tried to have declared unconstitutional. But the economy plummeted in 1999, unemployment rose, the Brazilian real was devalued and Cardoso's legacy was tarnished.

Lula had stood for a vague sort of revolution. The PT linked itself firmly to the anti-globalisation movement. At the opening of the World Social Forum last year, Olivio Sutra, the regional governor, told a packed hall of supporters that "the neoliberals have created a jungle where only strong beasts survive. They legitimise violence against the people. We can, we must, find a better world."

But Lula has now found neoliberalism - or, at least, he has found something that sounds like it. He has reversed his policy of renouncing some of Brazil's $300bn foreign debt, and insists it will be honoured. He says he is for free trade, so long as Brazil's goods are given fair access (which they are not, currently, in the US). He has renounced his pledge to raise the top income tax rate from 27.5 per cent to 50 per cent.

Like new Labour, the PT would give tax breaks and raise the pay levels of the poorest in society (who are, however, much more numerous than in the UK). But unlike new Labour, it says it would look closely at the corporations and utilities that Cardoso privatised, and may renationalise them.

Lula faces a rapidly growing menace from a populist candidate, Anthony Garotinho, a former governor of Rio de Janeiro state, whose born-again Christianity appeals to the burgeoning evangelical movement, and whose promises to double the minimum wage and lay on cheap canteens and hostels for the poor risks outflanking Lula on the left. The danger is not that the left will come to power with a determined left-wing programme; rather that it will come in with a large dose of idealism, and steer straight for a worse crash than the one which afflicted Brazil, the world's tenth largest economy, under Cardoso.

In Argentina, until recently the most advanced South American state, tragedy has already struck. The nation's descent into economic instability over the past two years has turned into a rout: the peso has been devalued to an official rate of 3.4 to the dollar; all essential services have suffered severe cuts; bank deposits have been frozen and property essentially commandeered by the state.

The interim president (to December 2003) is Eduardo Duhalde, a former governor of Buenos Aires province who comes out of the decaying remains of the Peronist tradition. Peron, who ruled in two postwar periods, implanted a style of corporate populism built on close agreements with national capitalists and labour leaders. Under the former president Carlos Menem, also a Peronist, the country was wrenched out of its protected state and given the neoliberal treatment, with a tight money regime and a rapid and extensive privatisation programme. Much of the Menem period was highly successful - with strong growth and booming exports. But the spending in his second term far outstripped growth and debts were taken on that could not be serviced, and on which Argentina defaulted last December.

The latest polls show an independent politician, Elisa Carrio, founder of a movement called Argentina for a Republic of Equals, leading - in part because she has never been tainted by power.

Argentinians are trying to deal with the crisis by pooling their skills and resources in neighbourhood councils that have sprung up everywhere. People talk of hunger stalking the land and strikes and blockades abound; and long queues form outside exchange offices and banks every day in a desperate flight from the peso to the dollar. The Italian consulate (many Argentinians have Italian forebears, and can claim Italian citizenship if they can prove an Italian-born grandparent) is making appointments for four years hence. The IMF, which has pumped money into Argentina for years, now refuses to save it once more.

The failure of either the right or the left to erect and sustain independent and strong institutions threatens a political and economic meltdown. If the left wins control, it will either have to hastily follow Lula down the neoliberal learning curve, or deepen the instability by waging war on a disappearing capitalist and middle class.

Elsewhere, the same politics of the dead-end street are being played out. Uruguay, dependent on both Brazil and Argentina for its economic health, is striving to avoid the crisis of the latter. Once a model of institutional integrity and fiscal responsibility, it is now crippled by 20 per cent unemployment. The Socialist Progressive Broad Front (Epfa) opposition, led by Tabare Vazquez, would seem likely to win any presidential election held soon on a programme of opposition to austerity and privatisation - especially since there is little hope that the country can improve its finances while its neighbours remain enmired.

The arc of Andean states in the north-west corner of South America - Bolivia, Peru, Ecuador, Colombia and Venezuela - are, collectively, in an even worse shape. Alejandro Toledo of Peru took office less than a year ago pledging economic recovery and more jobs: the first is beginning to appear but the second has not; his opponents blame his pro-market policies and his privatisation plans. Toledo, despite earlier promises, has also failed to bring the former president Alberto Fujimori to justice for alleged criminal financial activity.

In Bolivia, popular despair at what people see as the ravages of free marketry has produced mass mobilisation, marches across the country and strikes. The war on the coca (cocaine) crops, energetically pushed by the US, has cut incomes in the grey economy; and a reform of the laws that cut smuggling put further pressure on these unofficial but necessary wages. The privatisation of utilities such as electricity, gas and telecommunications resulted in more investment and better service but fewer jobs - a pattern gloomily repeated across the continent.

Carlos Toranzo, a political scientist based in La Paz, told the Financial Times that he saw an "Andean pattern" in which "we have arrived at democracy, but people think political parties are not necessary". The comment could be made of all Latin America. Instead of parties, the charismatic individual is making a comeback - as in the case of Hugo Chavez, the president of Venezuela, who was deposed in a military coup in April but was brought back to power when his supporters protested in larger numbers than the army had predicted.

Chavez's ousting by the army was an untypical act in a region that believed it had put military interventions behind it. But now, as it fails to adapt to the pressures of globalisation, as the US loses interest in enfolding it in the North American Free Trade Agreement area and as - in the case of Argentina - even the IMF will not stump up once more, the left may, unsuppressed by the military, promise deliverance and inherit a desert.