- The Washington Times - Monday, December 29, 2003

SAO PAULO, Brazil — A new crop of Latin American leaders ushered in 2003 with populist rhetoric and pledges to boost living standards for their countries’ have-nots, prompting investor fears of a regionwide economic meltdown.

By the end of the year, Bolivia’s president had been ousted in a bloody rebellion, but Brazil’s first elected leftist leader emerged as a Wall Street darling while maintaining strong domestic support.

Venezuela’s Hugo Chavez defied huge protests seeking his resignation. The presidents of Ecuador and Peru, however, faced plunging popularity as they failed to boost employment and reduce poverty.

Many poor Latin Americans were no better off by the end of the year. In most countries from Colombia in the north to Argentina in the south, economies stagnated at best.

“You have populists with the same old problems, and no progress on growth and inequality,” said Carol Graham, a Latin America analyst and fellow at the Brookings Institution in Washington. “Latin America has had a bad couple of years, and people are frustrated.”

In Mexico, the peso hit record lows recently as the country’s fractured Congress split over how to raise money for a tight budget. Foreign investment slowed, and money from Mexicans working abroad became the country’s biggest source of foreign income after oil.

But skittish investors who had sent billions to safe harbor outside South America last year ventured back in search of bargains when they saw the region avoid a big political turn to the left. They also bet that South America’s top economies — Brazil and Argentina — had hit bottom and were poised for a turnaround.

It was a big change from early 2003. When former union firebrand Luiz Inacio Lula da Silva became Brazil’s president in January, he spent his first day in office having breakfast with Mr. Chavez and dinner with Cuban leader Fidel Castro.

But a new leftist alliance in Latin America — Mr. Chavez called it the “axis of good” — didn’t materialize.

With fanfare, Mr. Lula da Silva initiated his “Zero Hunger” program to feed 40 million Brazilians who get by on less than $1 a day, but he shied from other big spending.

Mr. Lula da Silva’s popularity slipped as Brazil slid into a recession and unemployment rose to 13 percent, but polls this month show that he still has 70 percent support.

Most voters in Latin America gave their leaders extended honeymoons, but that could end if economic conditions don’t improve in the new year, said Felipe Noguera, a political consultant and pollster in Buenos Aires.

“I think that we’re in a phase where this populism from the left has taken over and has not come up with the goods yet,” Mr. Noguera said. Latin America’s leaders “are living right now on the benefit of the doubt, but the next election cycles will be their real tests.”

In impoverished Bolivia, people didn’t wait for millionaire President Gonzalo Sanchez de Lozada to fulfill promises to start a public works program and create jobs.

His plan to export natural gas from the country’s huge reserves generated protests that left 70 persons dead. He resigned in October and went into exile in the United States 14 months after taking office.

Venezuela’s Mr. Chavez seemed on the verge of ouster in January during weeks of general strikes. Thousands of businesses shut down, and hundreds of thousands lost jobs.

But strike leaders fled into exile when Mr. Chavez used the protests as a pretext to fire 18,000 dissident oil workers and seize control of the state-owned oil monopoly. He turned it into a cash cow for his “Bolivarian revolution” for the nation’s majority poor, named after Simon Bolivar, the 19th-century South American liberator.

Social spending boomed, and with it Mr. Chavez’s popularity. However, he faced a new opposition campaign for a presidential recall referendum next year — reflecting frustration over 20 percent unemployment, 25 percent inflation and high crime.

Argentina’s new president, Nestor Kirchner, had popularity ratings above 75 percent after taking office in May with just 22 percent of the vote, the lowest in Argentine history.

The 53-year-old president, dubbed “Hurricane K,” won over Argentines by purging leaders of the corruption-tainted police force, overhauling the military brass and ousting officials with links to the 1976-83 military dictatorship.

Having taken over a country gripped by ferocious recession, the Kirchner government projected 5.5 percent growth for the year.

Even Colombia, historically South America’s most volatile and dangerous country, showed signs of stability. Despite a referendum loss that robbed him of funding, President Alvaro Uribe still waged war on two leftist rebel groups while negotiating the demobilization of rightist paramilitary groups that had emerged in the 1980s to combat the rebels.

Democracy continued to take root regionwide. Though it was fitful at times, every country in the region could boast some form of representative democracy except Cuba, which arrested 75 dissidents in May and sentenced them to lengthy prison terms.

In Guatemala, former dictator Rios Montt tried a comeback via the ballot box but failed.

Experts warned that Bolivia’s upheaval was a reminder of how politics in South America can suddenly spiral out of control.

Bolivian protesters simply “didn’t want to wait to vote their president out in the next election,” said Stephen Haber, a Latin America analyst at Stanford University’s Hoover Institution.

The only remedy is for politicians to deliver on promises to reduce poverty, Mr. Haber said.

“When you have conditions where most people resent the upper classes and where there is no social mobility, it’s hard to sustain a democracy,” he said.

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