Argentina's Crisis: It's Not Just Money, New York Times January 13, 2002 By LARRY ROHTER BUENOS AIRES THROUGHOUT Argentina's long, slow-motion slide into bankruptcy, default and devaluation, Wall Street and Washington worried mainly about what came to be called "contagion," the fear that the economic crisis here would infect neighboring countries. Now that the collapse has occurred, the larger, more immediate danger may prove to be the spread of an old and eternally appealing political idea: resentment-based populism. Four South American countries will be having presidential elections over the next 10 months: Bolivia, Colombia, Ecuador and Brazil. In each, the disintegration of the Argentine economy after a decade-long experiment with free-market policies provides ammunition for candidates who reject the notion, propagated by the United States, that there is an unbreakable link between democracy and the North American model of an open economy, a combination Latin Americans call neoliberal. "The idea that the neoliberal model of the Washington consensus is dead is something heard not just in Argentina, but being repeated throughout Latin America," said Felipe Noguera, a political consultant and analyst here. "There are a lot of people out there right now who are looking for an alternative and have concluded that Argentina offers one." The new president who took office here on Jan. 1, Eduardo Duhalde, is the product of an electoral machine founded by Argentina's original 20th-century populist, Juan Perón. For more than 50 years it has had a top- down view of politics, preferring to organize society into "sectors" like labor unions and employer associations, rather than appeal to voters primarily as individuals. In return for their loyalty, Argentine companies and workers were allowed to flourish behind protective tariff walls, at least until a decade ago. Combined with Hugo Chávez, the former paratrooper and perpetual critic of "savage neoliberalism" who has served as president of Venezuela since 1999, that gives advocates of populism beachheads at both ends of the continent. And in Brazil, where anxious voters have been monitoring both the Venezuelan and the Argentine experiments, Luiz Inacio "Lula" da Silva of the Workers' Party, an admirer of Mr. Chávez and an opponent of free market policies, continues to lead the polls as he makes his fourth run at the presidency. Until recently, the traditional solution to a crisis like Argentina's would have been a military coup. But the armed forces are discredited nearly everywhere in Latin America, and in the few places where they are not, like Venezuela, officers are extremely reluctant either to tarnish their image by intervening in politics, or to take over a mess they can't clean up. "Populism implies that you have money to spend, and these days the money just isn't there," said Michael Shifter, a senior fellow at Inter-American Dialogue, a policy analysis group in Washington. "What you're seeing in country after country is that they've simply run out of options." Indeed, South America's most worrisome problem may be that nothing seems to work anymore. In Venezuela, even Mr. Chávez is not immune. These days, his popularity is falling even faster than the price of oil. The result is a radicalization of his "Bolivarian Revolution," with incitations to class warfare and the rare spectacle of a successful national strike called jointly by labor unions and employer groups to protest what they see as the president's growing authoritarian tendencies. General Perón, an archetypal Latin American caudillo, or strongman, has always been one of Mr. Chávez's idols. The Venezuelan leader has also been counseled by Norberto Ceresole, a neo-Peronist Argentine sociologist who preaches a "postdemocratic" ideology based on the idea that a charismatic leader can forge a mystical bond with the masses, thereby eliminating the need for political parties. Critics of the ideology like to point out that Europe's early fascists had a similar skepticism about classic democracy; Mr. Perón, in fact, modeled his government after Mussolini's. In the column that he writes for leading Latin American newspapers, the Peruvian novelist Mario Vargas Llosa noted last week that "the sound and the fury of a popular mobilization against the political class" here in Argentina last month was very much like "that which preceded the meteoric political career of Comandante Hugo Chávez in Venezuela and began the erosion of its democratic system." With traditional political leaders and parties increasingly discredited, a space has opened for leaders who present themselves as outsiders and emphasize their distance from the system. In Mr. Vargas Llosa's own country, that kind of voter rage and disgust has already produced both Alberto Fujimori and, after a traumatic decade of authoritarianism, the current president, Alejandro Toledo, without an accompanying reinvigoration of the political system. IN urging countries around the world to embrace free markets and free trade alongside free elections, the United States has held out the hope that rapid economic progress, benefiting all segments of society, will follow. But with their economies wobbly or worse, critics in Latin America are increasingly skeptical, and their attention is now focusing on the political side of the formula as well as the economic one. "When you pursue the economic logic, you tend to shortchange the political logic," said Eduardo Gamarra, director of the Latin American and Caribbean Center at Florida International University in Miami. The United States, he said, "urged policies that dismantled traditional ties, between labor and the Perónists, for example, but didn't construct anything in its place. Now the problem is how to construct those when there is an absolute rejection of political parties and the political system." After having largely ignored Latin America since the Sept. 11 terrorist attacks, the White House seems to be awakening to the danger of instability in its own hemisphere and moving to demonstrate American interest. President Bush is expected to visit the country he knows best, Mexico, in March, and a trip to South America is being contemplated for later in the year. But that late recognition is a far cry from Mr. Bush's initial promise of a foreign policy focused on spreading prosperity and democracy throughout the hemisphere. And it does not offer a solution to the threat implicit in a piece of graffiti sprayed on a sidewalk across from the Casa Rosada, the presidential palace that has been the focus of violent antigovernment protests here: "We are going to keep on coming. Signed, the People."