The New Crop of Leaders Is No Cause for U.S. Worry

Peter Hakim is president of the Inter-American Dialogue.

After nearly five years of deepening economic despair and growing political disorder, Latin Americans may be tempted to abandon market economics, democratic politics and their decade-long effort to hook their economic future to the United States. Luiz Inacio Lula da Silva’s victory last month in Brazil’s presidential elections suggests they may be giving in to temptation. Not since Hugo Chavez was elected president of Venezuela in 1998 has the left registered such a success. With the expected election today of a populist president in Ecuador and gains made by Peru’s leading leftist party in regional elections last week, that success shows signs of multiplying.

The longer-term significance of Lula and other leftist leaders hinges mostly on whether they can govern responsibly, revive growth, maintain economic stability and deal effectively with critical social needs. If so, they may produce a reordering of Latin America’s political map -- and help reinvigorate the region’s erratic and dispirited politics.

But some in Washington, including the chairman of the House International Relations Committee, Henry J. Hyde (R-Ill.), already see the emergence of a Latin axis of evil, with Lula making common cause with Fidel Castro and Chavez. Their anxiety is unwarranted.

Wherever one turns in Latin America, moderation, not extremism, seems the order of the day. Despite his populist rhetoric and origins, Ecuador’s Lucio Gutierrez, if elected today, will retain the U.S. dollar as his country’s official currency -- and, like Lula, will work with the International Monetary Fund to pay down his nation’s debt. In Argentina, the “anti-system candidates” calling for a radical political make-over have been dropping steadily in the polls despite the economy’s continuing woes. The winner of next March’s presidential election is likely to come from the Peronist party. And Latin America’s most vocal populist, Chavez, may soon be forced from office.


Nor are Latin American countries turning their backs to the United States. Chile will soon sign a free-trade agreement with Washington. This year, Central American countries eagerly accepted a U.S. invitation to begin free-trade negotiations, and the Andean region countries lobbied Washington hard to maintain trade preferences. Nearly every nation in Latin America wants the continuing free-trade negotiations with the U.S. to succeed. The exception may be Brazil, but free-trade arrangements fell out of favor there long before Lula’s triumph at the polls.

Latin American support for market economics, at around 57%, has remained stable over the last three years, according to the respected Latinobarometro poll. Most of the region’s citizens oppose turning state enterprises into private companies because these transactions are widely viewed as rife with corruption. In the same poll, some 70% of Latin Americans held a “good” or “very good” opinion of the United States.

These positive trends do not offset the fact that dissatisfaction with economic performance in Brazil and elsewhere in Latin America is widespread and deep. Many blame the IMF, World Bank and the U.S. Treasury -- along with the national leaders and parties implementing the market model for economic growth -- for their misery. If the region continues to stagnate economically and flounder politically, advocates of alternative policies and approaches will gain strength and begin to win more elections, as happened in Brazil.

The most important test of Lula’s commitment to a centrist agenda is whether he adheres to the strict fiscal targets of Brazil’s IMF program. So far, he has resisted appeals from state governors to renegotiate debts and has proposed only moderate wage hikes. If Lula perseveres, the new president will reassure foreign investors and enjoy access to the international credit Brazil needs.

Lula’s government also has to kick-start a languishing economy, which will require Brazil’s still-insular economy to open further. That means the United States and Brazil will have to reach politically difficult compromises if they are to successfully negotiate a hemisphere-wide free-trade agreement. In addition, Lula will be challenged early on to win congressional approval for two critical reforms that will help the government balance its books and free resources for social uses. One is revamping the country’s archaic tax system; the other is restructuring wasteful and patently unfair pension plans that Lula’s public-sector union allies zealously defend.

That will make it difficult for Lula to satisfy immediately his staunchest supporters, Brazil’s poor. He has announced a campaign against hunger, but it is also important that he sustain his predecessor’s progress in education, health and land reform. That all requires money he doesn’t have. But by attacking racial discrimination, which demands presidential leadership more than new resources, he can help Brazil’s poorest and most excluded group, the 40% of African descent.

Although Lula may not become a Latin American Tony Blair, a fully committed “third way” politician, he is no Marxist-Leninist, and his commitment to democratic politics is unquestioned. Nor is he a one-man band like either Chavez or Castro. He is backed by an established political party that has elected half a dozen governors and more than 70 mayors, and now holds more seats than any other in the Brazilian congress.

Washington needn’t worry.