Analysis: "Lulismo" appeals in Latin America but hard to copy

RIO DE JANEIRO/LIMA Wed Jun 22, 2011 12:08pm EDT

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RIO DE JANEIRO/LIMA (Reuters) - It was a political pilgrimage that surprised no one.

Within days of winning Peru's presidential election, Ollanta Humala flew to Brazil to learn more about its success over the past decade and meet former President Luiz Inacio Lula da Silva, who inspired Humala's journey from the radical left toward the political center.

Humala's election victory was the latest sign that Lula's mix of market-friendly policies and social programs for the poor, credited with turning Brazil into an economic powerhouse, is going international. Call it the Brasilia Consensus, or "Lulismo."

The former union boss established an enviable electoral formula by making deep inroads into poverty in his eight years in power while pleasing Wall St. bankers and elevating Brazil into the league of emerging market powers like China and India.

Leftist Mauricio Funes won El Salvador's presidency in 2009 at the head of a party of former Marxist guerrillas after convincing enough middle-class voters that he was inspired by Lula rather than Venezuela's socialist President Hugo Chavez.

One of Lula's leading election marketers even helped him craft his campaign, and other former advisers to Lula's party helped Humala craft his campaign message in Peru.

In South America, several leaders have opted to take the Lula path -- most notably Jose "Pepe" Mujica, a former guerrilla who was elected president of Uruguay in 2009.

Paraguay's President Fernando Lugo has also steered clear of copying the more radical leftist policies of the region since his election in 2008.

And pointing to the Lula model is now smart politics for any left-wing candidate in Latin America looking to ease voters' concerns that he or she might be too radical.

"Brazil is the lodestar, the reference for a lot of governments as an example of success," said Michael Shifter, president of the Inter-American Dialogue in Washington.

"There are vast differences between Brazil and other Latin American countries but there does seem to be a formula, a consensus that has produced real results."

EASIER SAID THAN DONE

Still, copying the Lula formula is easier said than done, as Humala may discover in the coming months.

Lula's two-term presidency -- which ended on January 1 when his hand-picked successor Dilma Rousseff was sworn in as president -- was built on a long journey to the political center by his Workers' Party, a sustained boom in global commodities prices and his own magnetic charisma.

In contrast, Humala's embrace of center-left policies came much later and his party lacks the institutional strength of the Workers' Party in Brazil. Peru, whose previous government had center-right policies in line with countries such as Chile, Colombia and Mexico, has a tiny budget that limits its ability to help poor, rural areas.

"Any emulation is going to face serious limitations," said Matias Spektor, an international relations professor at the Getulio Vargas Foundation, a think tank in Rio de Janeiro.

"That said, what Humala seems to be doing is realizing that there is a message for progressive parties in the region that you do need financial stability with some degree of redistribution. It's not about people on the street fighting the old elite, it's about minimal-level redistribution."

Lula himself has hailed Humala's win as a step forward in Latin America for the progressive left, in which he included Venezuela's Hugo Chavez and his closest disciples, Bolivian President Evo Morales and Ecuador's President Rafael Correa.

"While in the European continent, politics is moving to the right and conservatives are occupying space, in Latin America it is the progressive sectors that are advancing," Lula was reported as saying in Sao Paulo with Humala on June 10.

LULA OR CHAVEZ?

But there has long been a clear divide between Chavez's more radical brand of socialism opposed to U.S. influence and Lula's more moderate version. Lately, it is Lulismo that is gaining ground while the socialist, anti-U.S. alliance spearheaded by Chavez has run into trouble.

The economies of the Chavez-led leftist bloc have mostly struggled. Venezuela has been unable to tame double-digit inflation and economic growth has been patchy. The private sector has shrunk, nationalized companies have performed poorly and there are frequent shortages of basic goods.

Chavez has also lost support among ordinary Latin Americans in recent years with strong-arm policies such as threatening media freedoms, said Yehude Simon, a former leftist who served as prime minister under Peruvian President Alan Garcia.

"The Chavez of 2006 is nothing compared with the Chavez of 2011. He made a series of errors," he said. "Chavez can be very friendly and charming but sometimes he's very authoritarian."

In Peru, Humala repeatedly borrowed tactics from Lula, going as far as to hire two experienced aides from Brazil's Workers' Party to help run his campaign.

They had Humala -- who narrowly lost the 2006 election running on an ultranationalist platform that spooked investors -- codify his promises to fight inflation and run a balanced budget in a letter to the Peruvian people.

The tactic was borrowed directly from the playbook of Lula, who won the presidency in 2002 on his fourth try by casting himself as a moderate who had outgrown his hard-left roots.

Humala also wants to emulate another pillar of Lulismo -- wealth distribution policies that in Brazil have helped lift millions of poor people into a thriving lower middle class.

Humala has proposed taxing the windfall profits of wealthy mining companies for a fund to help the one-third of Peruvians who are poor, but critics say that model will only work if commodity prices stay high.

"Humala is going to need a lot of skill to keep foreign and Peruvian businesses investing here while managing demands from the provinces for better social programs," said Simon.

Peru and other countries in the region have much smaller federal budgets, limiting the ability of governments to copy Lula's heavy spending on social programs.

Their economies are also far less diversified than Brazil, so they are more vulnerable to economic shocks caused by a slump in commodities, for example. A sharp downturn in prices could quickly undermine their ability to keep financial markets and their poorer citizens happy at the same time.

In the end, it may be communist China -- now Brazil's No. 1 trade partner and Peru's second-biggest -- that could be the most important factor determining the success of Lulismo inside and outside Brazil.

"If China's economy suffers a slowdown, it will be a problem for Humala," said Simon. "Much of Latin America is dependent on China."

(Additional reporting by Andrew Cawthorne in Caracas; Editing by Todd Benson and Kieran Murray)

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