After the 'Battle for Latin America's Soul'

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Venezuelan President Hugo Chavez waves to supporters during a political rally in Caracas, 26 November 2006.

Hugo Chavez is back on the warpath. Venezuela's radical left-wing President took a humbling hit at the United Nations this month when his archenemy, the Bush Administration, blocked his bid for a Security Council seat — a prize for which he'd lobbied all over the world. Now, Chavez plans to get his revolutionary groove back, not just by winning re-election on December 3, but by destroying his U.S.-backed rival, Manuel Rosales, with a massive landslide.

Campaigning before thousands of roaring, red T-shirted socialist youths at a Caracas arena, Chavez leaps around the stage to the sounds of the Puerto Rican hip-hop derivative known as "reggaeton" and Venezuela's driving gaita music, unleashing all his raving martial thunder. "Be an army," he shouts, "whose commandos, battalions and platoons do combat day and night until we reduce our opponents to rubble and dust!" If, as expected, Chavez trounces Rosales on Sunday, he can technically claim victory in his larger fight with the U.S. — but just barely.

This year's election season across the continent was widely billed as a battle for Latin America's soul: Venezuela's contest is the last of a grueling 10 presidential races since last December that pitted Washington's globalization agenda against the more statist policies of the new Latin American left. And with leftist economist and Chavez pal Rafael Correa defeating conservative billionaire Alvaro Noboa in this week's Ecuador run-off vote, a Chavez win will give the left a 6-4 edge. But the intensity of the contest will be demonstrated elsewhere on Friday — at the inauguration of Mexico's conservative President-elect, Felipe Calderon. He'll likely face angry and perhaps violent protests by supporters of the leftist candidate he narrowly defeated last July, Andres Manuel Lopez Obrador — who insists that the election was stolen, and last week, in a bizarre bit of political theater, even had himself sworn in as Mexico's "legitimate president."

Yet for all the sound and fury it has generated, the region's near stalemate may be a good thing: For most of the 20th century, Latin America swung between oligarchic capitalism and populist socialism, and neither fixed the continent's tragic gap between rich and poor. A more sensible, European-style mix — a Third Way — was often discussed; but reactionaries like Chile's Augusto Pinochet and communists like Cuba's Fidel Castro gave it no room to breathe. Now, with democracy more entrenched in the region, the two camps have been forced to face the fact that Latin voters prefer fresh ideas to stale ideology — and that they don't want the U.S. to either invade or go home, but simply behave more respectfully south of the border.

In a recent TIME interview, Chavez himself insisted that "a third way is not possible." But when the microphones are off, Chavez doesn't always walk his radical talk — in fact, it's precisely his third-way programs that have been such a hit with the poor.

Luis Guevara, 50, is a Caracas cabbie who for decades drove wheezing, beat-up taxis because an elitist banking system denied him the kind of small business loan so desperately needed all over Latin America. Last year, under a microcredit project for wannabe capitalists created by Chavez from Venezuela's record oil windfalls, Guevara got a $15,000 loan at a reasonable interest rate; now he owns a new Chevrolet he can use to pick up fat fares at the airport. Guevara could care less what you call the policy: "It works for me whatever it is."

The same even holds true for BMW dealers, who amidst the oil boom of recent years have seen sales of their luxury autos (which can cost $100,000 in Venezuela) jump an annual 30%. Welcoming clients to a party at a swank Caracas restaurant, local marketing manager Andres Haiek admits that BMW's and Chavez's Bolivarian Revolution look compatible — "so far," he cautiously adds.

Mexico's Calderon, a Harvard-educated technocrat, will have to bend his own free-market ideology to keep a bitterly divided Mexico from erupting after he takes office. Special federal police forces have already been called in to quell deadly riots in the poor southern state of Oaxaca. In its broader context, the violence reflects a national backlash against the utter failure of globalization and a fledgling democracy to address Mexico's gross economic inequality. And that powder keg is nudging Calderon to acknowledge that the sort of social investment and regulatory reform programs for which he once ridiculed Lopez Obrador may not be such a bad idea. He recently spoke favorably to TIME of major initiatives in health and education and "reducing the power" of Mexico's gluttonous monopolies.

But the freshest notion a third way could bring to Latin America is transparent, accountable democratic institutions. The most pressing urgency is the need for judicial systems and police forces that can tackle Venezuela's soaring murder rate or neutralize Mexican drug gangs so vicious they're tossing the heads of decapitated rivals in streets and nightclubs. "Crime," Calderon concedes, "is a battle we are losing." Among many others. So maybe now, with the battle for Latin America's soul over, conservatives and leftists — and Washington — can focus together for once on a war to reduce the region's social and economic demons to rubble and dust.