- The Washington Times - Tuesday, October 8, 2002

RIO DE JANEIRO Three more painful weeks on the rack are in store for this country's tortured economy, as a leftist and a more "market-friendly" presidential candidate vie in a runoff election.
For months, the dominance of socialist Luiz Inacio Lula da Silva has sunk markets and raised fears that Brazil, South America's largest economy, will default on its $260 billion debt.
While Jose Serra, the candidate of the incumbent government, had a surprisingly good second-place showing in Sunday's presidential elections, analysts say any confidence that markets take from it will be short-lived.
Mr. Serra's chances of winning the presidency, local watchers say, are akin to the proverbial snowball's chance on Copacabana beach under a midsummer sun.
"We are not optimistic about Serra's chances," said Gustavo Reis, an analyst with the Rio-based Pactual investment bank. "Lula is just four percentage points away from the presidency. How does one keep him from earning those votes after such a successful campaign with the centrist electorate?"
In Sunday's election, Mr. Lula da Silva took 46.4 percent of the vote exactly double what Mr. Serra garnered. That left front-runner short of the 50 percent needed to win outright, but he is likely to gain the support of the third- and fourth-place finishers.
Anthony Garotinho who finished behind Mr. Serra, with 17.9 percent was free to toss support to Mr. Lula da Silva because of the result for the governor's race in Rio de Janeiro state. Mr. Garotinho's wife, Roshina, won that election in the first round, ousting the incumbent a member of Mr. Lula da Silva's Workers Party. A runoff there would have kept Mr. Garotinho from voicing support for Mr. Lula da Silva.
By yesterday morning, there were already reports in the local press that Mr. Garotinho was leaning toward supporting Mr. Lula da Silva but would abide by what his Brazilian Socialist Party collectively decides.
Mr. Serra, on the other hand, must hurriedly rekindle the fire under his centrist coalition that has ruled Brazil for eight years. Yesterday, he replaced his campaign chief. Two men will lead his strategy in the final three weeks the presidents of Mr. Serra's Brazilian Social Democracy Party and its coalition partner the Brazilian Democratic Movement Party.

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