LIMA, PERU -- Peruvian author Mario Vargas Llosa has emerged as a new political star here, heading a renascent center-right movement that seeks to prevent the proposed state takeover of private financial institutions.
The internationally acclaimed writer has taken on Peru's charismatic 38-year-old President Alan Garcia in a riveting clash of personalities and political principles.
Eloquent appeals by Vargas Llosa for freedom from state intervention are vying with energetic calls from Garcia for an economic revolution to favor the poor. The duel has accented a deep national rift over the planned nationalization.
"It's a battle of two populisms," said Julio Cotler, director of the Institute for Peruvian Studies.
The conflict has fed speculation that Vargas Llosa, 51, may try for the presidency in 1990, although he denies any interest in making politics a career. Latin American history is crowded with literary figures who turned their prominence to political advantage.
Garcia, up against the most intense political opposition he has faced since taking office two years ago, has crisscrossed the country defending the proposed expropriation. He says the move is necessary to decentralize the holdings of Peru's private financial groups and "to democratize credit," meaning to make loans available to small and medium-size businesses. Rallying to the president's side have been urban workers, Andean peasants and leftist politicians.
But the announced expropriation has started a groundswell of resistance from middle-class Peruvians who worry that Garcia's center-left American Popular Revolutionary Alliance (APRA) may attempt to grab more private property in the future.
Garcia insists the takeovers will stop with the nine banks, six finance companies and 17 insurance firms named as targets a month ago. Nonetheless, Vargas Llosa has managed to galvanize opposition by articulating the anger, distrust and insecurity felt by many in middle-income and upper-income communities.
Opponents of the nationalization complain that Garcia deceived them with previous assurances that the banks would not be nationalized.
Garcia notes that the expropriation was foreshadowed in his 1982 book, "The Different Future," in which he advocated governmental control of the "financial circuit," his term for Peru's core private economic groups.
The president's popularity has fallen from record highs in 1985 and 1986, reflecting economic and political troubles this year. But diplomats and Peruvian analysts contend that Garcia retains enough popular support to dissuade the armed forces from attempting a coup. The military ruled here from 1968 to 1980.
The problem for Garcia now is how to rebuild business confidence, shattered by the July 28 nationalization announcement. He had been trying to maintain a balance between encouragement of private investment through incentives and relief for the masses of poor through social spending. Unless private firms can again be coaxed into investments, officials fear an end to the current period of growth.
Presidential advisers hint that new incentives will be offered soon as a means of mending relations with investors. At the same time, Garcia insists that the nationalization project -- already approved by the lower house of Congress but stalled in the Senate -- must go through.
Vargas Llosa worries about the consequences for freedom if it does.
"If, in a country where democracy is so fragile, you give the state such economic power, it will be difficult for democracy to survive," he said in an interview. He warned that public officials will be tempted to use the banking system to put pressure on indebted enterprises, particularly news organizations.
"And what are the benefits of this nationalization?" he asked. "There are no practical ones. The whole system will just become more bureaucratic and more corrupt."
Rankled by allegations that his government is acting in a totalitarian way, Garcia used a recent meeting with foreign reporters to emphasize his commitment to democracy. The proposed nationalization, he said, is proceeding according to democratic procedures under the eyes of a free press.
"There's an idea that revolution isn't democratic," he complained. "That's the basic problem. People don't accept that there can be profound changes under democracy."
The intensity of opposition to the project caught Garcia by surprise. So did Vargas Llosa, who is proving an especially tough match for the president.
Although the author had spoken out many times on political and human rights issues, even heading a government commission that investigated the 1983 deaths of eight journalists in a guerrilla war zone, he had shied away from previous efforts to draft him for political jobs or campaigns. This time, he tells interviewers, he had to act.
Vargas Llosa's "state vs. society" slogan has proved an effective counter to Garcia's "rich-vs.-poor" rhetoric. The author's pitch has helped to give energy to a center-right movement that had been moribund under lackluster leaders since the early 1980s.
Nevertheless, many analysts question whether Vargas Llosa can head the resurgent movement for long, or even wants to. Lacking political experience, he has no party base, no development program, not even much regard for politics. "I don't like politics," he said.
Vargas Llosa seems eager to return to writing books -- he was proofreading his 20th novel when the nationalization plan was announced -- and to trips abroad, especially to London, where he spends several months each year. Yet he has taken to the stump like a natural politician, attracting large crowds in plazas in Lima, Arequipa and Piura over the past two weeks.
Hoping to stunt the growth of the author's political prominence, Garcia's supporters have financed advertisements recalling Vargas Llosa's support 20 years ago for a leftist military regime here and insinuating that he is a political opportunist.
Many still wonder why Garcia moved to seize the private banks. Was it really, as he insists, the result of his dissatisfaction with the scale of reinvestment of profits earned with the benefit of state subsidies, tax advantages and other government breaks? Or was it, as many suspect, a political expedient to steal the limelight from APRA rival Luis Alva Castro?
The answers seem less important now than the fact that the nationalization decision has created new dynamics. It has ruptured Garcia's relations with the business community, alienated the center-right and pulled APRA further to the left.
It has also transformed Garcia's image. Instead of appearing to entice investors with incentives, the Peruvian leader is now seen as bullying them with nationalization.
"He has changed from charmer to blackmailer," said Mirko Lauer, a Lima columnist.
But no one is underestimating Garcia's capacity for surprise.