The Return Of The Old Caudillo.(World Affairs)(populism)

Byline: Mac Margolis; With Brian Byrnes in Buenos Aires and Lucy Conger in LimaWith in Buenos Aires and in Lima

Latin America is finally thriving economically, yet the populist rhetoric is getting louder and stronger.

Listen to the rhetoric gusting around much of Latin America these days and you'd be forgiven for wondering if a new cold war was in the making. Suddenly, heavy-handed state interventions into the economy, such as price controls, stiff taxes and loose money, are back in fashion. So are takeovers of foreign assets, usually garnished with broadsides against "imperialismo." It's not just Hugo Chavez, the Venezuelan strongman, who in the name of his "Bolivarian revolution" has seized multinational oil holdings, bullied business, and generally beat the gringo devil. The demonization of the free market and its foreign sponsors is spreading throughout the region--and the sound bites are getting shriller. "The capitalist era is over!" vowed Evo Morales of Bolivia.

Don't wait for the revolution. Beyond the boilerplate anticapitalism, the assortment of caudillo firebrands, self-styled socialists and soi-disant revolutionaries now presiding over a large patch of Latin America--most prominently in Argentina, Bolivia, Ecuador, Nicaragua and Venezuela--lack any discernible doctrine that would fuel a common agenda. But what distinguishes these rulers is something far more familiar and potentially troublesome: populism. With the old split between social liberals and free-market champions that once ran through the hemisphere largely faded, a divide between democrats and authoritarian populists, the famous caudillos, has re-emerged, says Susan Kaufman Purcell, director of the Center for Hemispheric Policy at the University of Miami.

Both groups wax passionately about helping the poor. But while most democratic-minded leaders are committed, or at least resigned, to abiding by legislatures, the courts and the creaky machinery of the public bureaucracy, populists rule with their feet on the soapbox and their fingers in the national purse. Democrats are "committed to strengthening democratic institutions," says Kaufman Purcell, while the caudillos undermine democratic institutions "to concentrate political and economic power in their own hands."

In one sense, the return of populism is no surprise. Self-anointed saviors arrived with the conquistadors. "Give me a balcony and I'll become the next president," said Jose Maria Velasco, a five-time president of Ecuador early in the last century. Even democratic-minded leaders like Brazil's Luiz Inacio Lula da Silva can't resist playing to the galleries, raising the minimum wage and giving handouts to the needy. And as in most places, Latin American populism thrives in times of despair. Yet, strangely, the region has never looked fitter. Foreign debt has declined and trade is surging. After years of stagnation, the economy is growing--up 5.3 percent last year and on target to expand 4.6 percent in 2008. Last week, Standard & Poor's raised Brazil's debt rating to investment grade. Peru reached that state of grace a few weeks earlier, and Colombia ...