Garcia sees Chile as his economic example

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BUENOS AIRES -- Peru's newly elected president will model his economic policies after those in neighboring Chile, a pro-market government that has pursued U.S.-backed economic policies and close trade ties with Washington.

Alan Garcia, a former president who opposed pro-market policies during his first administration, told the local press that Chile is his model because it "is vigorous and energetically open to the world and works from the state and not from subsidies to reduce poverty."

Chile is widely considered to be the most stable economy in South America, having long maintained stable and largely orthodox economic policies. Experts say the country has reduced poverty through free-trade policies, foreign investment and relatively limited government intervention rather than through heavy social subsidies.

Chile's new president, Michelle Bachelet, a center-leftist, meets with President Bush at the White House today. Observers expect the agenda to cover trade between the two countries, which has swelled to $2.05 billion since a trade agreement was reached in 2004.

There were also reports that the Bush administration will press Chile to oppose Venezuela's bid for a nonpermanent seat on the U.N. Security Council. The Bush administration also may ask Chile not to ratify the International Criminal Court at The Hague, which the White House fears could become a forum for politically based trials against U.S. citizens.

After his victory in Peru's runoff election Sunday, Mr. Garcia told reporters that he was open to foreign investment and stressed his commitment to accelerate economic growth, according to press reports.

Boosted by high commodities prices, Peru's gross domestic product grew 6.5 percent, the highest rate in nine years.

Mr. Garcia takes a more favorable view of a pending trade pact with the United States than did Ollanta Humala, the left-wing nationalist who ran against him. The deal was signed in April and is set for congressional ratification in both countries.

Mr. Garcia said the trade deal should be discussed "chapter by chapter and line by line." Mr. Humala, a former military officer who promised to nationalize industry and roll back the pro-market reforms of outgoing President Alejandro Toledo, won 44 percent of the runoff vote. Mr. Garcia took in 55 percent.

Many pin Mr. Humala's defeat in large part on Hugo Chavez, the firebrand president of Venezuela. His repeated backing of Mr. Humala caused a diplomatic rift between the two countries and gave a political card to Mr. Garcia, who depicted his opponent as a Chavez puppet and now casts his election as a defeat for Mr. Chavez's regional designs.

Despite his rhetorical engagements with the Venezuelan leader during the campaign, Mr. Garcia on Monday denied intentions to spearhead a continental effort to contain the leftist leader. He called for mutual respect between the two South American countries.