Monday, October 13, 2003

BRASILIA, Brazil — He was swept into office nine months ago, a charming populist who rose from humble roots as an assembly-line machinist to the leadership of a national labor party that sports a red star as its symbol.

During his presidential election campaign last year, Luiz Inacio Lula da Silva gave Wall Street the shivers, sparking fears that he would install a leftist government at the helm of South America’s largest economy and turn his back on the market reforms and free-trade agreements being pushed by Washington.

Instead, Mr. Lula da Silva — known here as Lula — has so far defied easy political pigeon-holing, mixing leftist rhetoric with centrist policies.

In September, the populist Mr. Lula da Silva addressed the United Nations in New York, where he called for a global fight against hunger, lecturing the world’s rich on the misery of the poor.

“Despite the failure of systems that favor the generation of wealth without reducing extreme poverty, many people still persist in their shortsightedness and greed,” Mr. Lula da Silva told the General Assembly. “We have no right to say to the famished that have waited for so long, ‘Wait for another century.’”

Back home in Brazil, however, Mr. Lula da Silva has surprised many by hewing mostly to the center, appointing moderates and even conservatives to key economic positions, promising to pay down Brazil’s worrisome foreign debt and sparking a stock-market rally that has bolstered the value of Brazil’s currency.

“What people feared was never the real Lula,” said Rui Nogueira, Brasilia editor of “First Reading,” a magazine of politics and business. “He’s not a Marxist or a socialist. I’m not surprised that he has followed a moderate course.”

Indeed, since taking office in January, Mr. Lula da Silva has defied critics who pegged him as a hard-line leftist. He has kept Brazil’s interest rates high to stifle inflation, has demanded — in the face of angry protests — painful cuts in the government’s bloated pension system and has disappointed radical, landless protesters by taking only slow steps to fulfill their demands.

He’s had cordial meetings with President Bush in Washington, agreeing to push forward with negotiations on the Free Trade of the Americas agreement that Mr. Bush has listed as his top priority in this hemisphere.

But Mr. Lula da Silva, 58, has not abandoned his populist roots.

In addition to meeting Mr. Bush, he has kept close ties with America’s nemesis, Fidel Castro. More pointedly, he has aligned with Argentina’s new president, Nestor Kirchner, in a bid to revive the South American trading block Mercosur and strengthen his hand in the upcoming trade negotiations.

At recent trade talks of the World Trade Organization in Cancun, Mexico, Brazil emerged as a leader among the poor nations demanding that rich countries like the United States cut their agricultural subsidies and tariffs that handicap imports.

Although the demands triggered the collapse of the talks, Mr. Lula da Silva — who didn’t attend in person — vowed to continue the fight.

“We want the opportunity to compete freely,” he said. “That is all we want, and we will now go to the WTO to carry out the rest of the fight.”

Nine months into his term, Mr. Lula da Silva is emerging as a more complex and capable leader than many expected. Rather than an unyielding ideologue, he’s proving to be a pragmatist ready to make hard deals, even as he continues pressing Washington and insisting he’ll stand his ground on tough issues.

“The country is in awe looking at Lula,” said Renan Suarez, a professor of politics at Brasilia’s private Pioneer Union of Social Integration College. “He has managed to organize his government and the country and to get most of his ardent supporters to calm themselves. I would say Lula is a fox.”

Few doubt Mr. Lula da Silva’s political savvy. Raised in poverty in Brazil’s north, he moved to the booming industrial hub of Sao Paulo and with little education became a factory machinist. He quickly got involved in the Workers Party, moving up to leadership roles that made him a national figure.

He ran for president three times before winning last year with support from a surprisingly wide swath of Brazilian society.

In a country long ruled by members of the elite, the election of a working-class president was a watershed and has captivated many throughout the region. But the focus on his humble roots has overshadowed the fact that Mr. Lula da Silva earned his stripes through long years of tough fighting within his own party and in struggles against the government and powerful businessmen.

While Mr. Lula da Silva’s move to the political center has eased fears on Wall Street, others worry that he might spark a backlash from the left that could endanger his political base, leading to weak leadership or even paralysis.

Already, the extreme left’s infatuation seems to be wearing off. Brazil’s highest-profile radical group, the Landless Worker’s Movement, was a staunch supporter, calling off its campaign of invading unoccupied properties in the early months of his term.

In recent months, though, the group has restarted the provocative campaign, leading some to fear Mr. Lula da Silva will face a showdown that could spark violence and bloodshed.

But many Brazilian commentators say the extreme left in Brazil is tiny, and the more important fact of Mr. Lula da Silva’s early months in power has been his success in calming financial markets and pulling the country out of its economic tailspin.

“He gets it,” Mr. Nogueira said. “He knows that what will keep him popular and in power is a good economy.”

The poor backed Mr. Lula da Silva’s election in overwhelming numbers, and his greatest vulnerability seems to be the expectations he has raised that he will somehow magically eliminate Brazil’s stark income disparities, opening new doors for the poor masses.

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