BUENOS AIRES -- Lydia Massone says she is embarrassed to be a new member of her neighborhood barter club.

"I'm angry at the politicians who put me here," she said, surveying the hundreds who come each week to trade services or home-produced goods for anything ranging from pizza to new plumbing in the ritzy Barrio Norte section of town.

Once a well-heeled member of Argentina's middle class, Massone grew accustomed to foreign vacations, a fancy apartment and the security of a dollar-denominated nest-egg sitting in the bank.

But like many Argentines, her lifestyle has spiraled downward in the past eight months. Her savings were trapped after the government froze bank accounts in December. In January, her employer, a travel agency, went bust. And since her husband died in March, she has been forced to barter clothes to make ends meet.

Disappointed with hollow promises and disgusted by years of unchecked political corruption, millions of middle-class voters like Massone are playing a key role in the recent upsurge of left-wing parties that is rapidly changing the political landscape in Latin America.

In Brazil, a former union leader, Luiz Inacio Lula da Silva, is the front- runner for the presidential election in October. In Argentina, Elisa Carrio, a populist firebrand, is expected to become the country's next president.

In Bolivia, Aymara Indian Evo Morales, who campaigned on an anti-free- market platform that included nationalization of key industries, finished second among 11 presidential candidates last month, while his Movement to Socialism party won a strong presence in Congress.

STATE OF EMERGENCY IN PERU

Mass protests in June forced Peruvian President Alejandro Toledo to declare a state of emergency after plans to privatize two power utilities in Arequipa sparked five days of riots. The ensuing violence caused three deaths and $100 million in damages.

And just this month, opposition to free-market policies in Paraguay led to bloody riots that forced President Luis Gonzalez Macchi to also declare a state of emergency.

The growing popularity of the left is based on opposition to free-market policies advocated by the International Monetary Fund and implemented by a generation of U.S.-trained economists and politicians. Their demand for more sovereignty over economic policy has also hit a powerful chord.

On Tuesday, thousands of unionists, retirees and others in Buenos Aires waved anti-U.S. placards at Treasury Secretary Paul O'Neill, who arrived on the last leg of a regional tour that included stops in Brazil and Uruguay. The protest underscored a growing resentment against the United States.

"What we are seeing in Latin America is not so much a return to socialism, but the growing popularity of economic nationalism," said Julio Burdman, director of research at the New Majority Studies Center, a political research group in Buenos Aires. "Ideology is circumstantial to the rise of many of these figures from the left. What's important is their opposition to globalization and U.S.-inspired policies."

For the past decade, much of Latin America has struggled to adopt Washington's recipe of free markets and free trade. Across the region, governments promised prosperity through foreign investment, tight monetary policies and privatization.

RESULT OF PRIVATIZATION

At first, inflation tumbled, competition improved services, and investment fueled growth. But the promised prosperity materialized only for the few. For the majority, privatization led to higher unemployment, cutbacks in service and price hikes.

And after most big-ticket state-owned items were sold off, foreign investment slowed to a trickle. As economic growth stalled in the late 1990s, governments adopted austerity measures that slashed social services, pension payments and funds for education and health care.

In some countries, the middle class is disappearing. Argentina's economic crisis has caused a 21.5 percent unemployment rate, the highest in the nation's history, and half of its 36 million people are in poverty. Real hunger has appeared in a country that once provided food for the world.

"A new group is emerging from the middle class in Argentina," said Buenos Aires charity worker Silvia Baez. "They are hungry, have inadequate clothing and anguish in their faces. We call them the 'new poor.' "

Some analysts say that the rise of the left also signals a deeper trend, which is perhaps graver for the region's long-term political landscape. Rather than throw in with the left, people who would once have voted for center-right parties are simply dropping out of politics altogether.

"An entire generation that once took an interest in the electoral process now has no interest at all," said Danilo Morales, president of the Costa Rican- based political consultancy group Gaia Consultores. "This pattern is being repeated across the continent."

POLITICAL CORRUPTION

In part, the disillusionment over politics is a reaction to the corruption that has accompanied Latin America's experiment with free-market policies.

"Corruption is at the heart of the problem," said Morales. "It's a cancer that has spread through our society. It's meant that most politicians have lost their credibility."

Unfettered by sufficient oversight procedures, privatization programs and the transfer of government functions to the private sector have fueled patronage and what many call "crony capitalism."

The anti-corruption group Transparency International gives Latin American countries an average of 3.6 out of 10 in its corruption index for 2001, worse than Botswana, Namibia and Bulgaria.

"Finding a solution is not a question of changing one politician, or even an entire political class," said Luis Moreno Ocampo, Transparency International's director for Latin America. "It involves encouraging a new business class not to buy politicians."

Widespread corruption has scared away not only voters but honest politicians, who are wary of running for office for fear of becoming tainted themselves.

"All over Latin America you have people calling the business community, lawyers and consultants to run for office," said Juan Jose Rendon, president of Venezuela's Association of Political Consultants. "But it's incredibly difficult to remain honest in Latin American politics."

The shortage of serious potential leaders has also led to the apparent swing to the left. In Argentina, Carrio is leading the polls by default after a long list of potential presidential candidates have dropped out of next March's election. The two remaining candidates are Carrio and former president Carlos Menem, who has been involved in several corruption scandals.

Analysts say it remains to be seen whether a new generation of politicians will succeed in bringing disillusioned voters back into the political process.

If they don't, Latin America may find its political landscape increasingly prone to radical shifts between opposite poles.

©2002 San Francisco Chronicle

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