December 30, 2002, 17:15

President Thabo Mbeki and Foreign Minister Nkosazana Dlamini-Zuma, will attend the inauguration on Wednesday of Luiz Inacio "Lula" da Silva as Brazil's new president. Da Silva, a former metalworker and trade unionist, was elected president on October 27.

"The participation of President Mbeki and his delegation in the inaugural ceremonies of the new Brazilian president is expected to further cement the already excellent relations between South Africa and Brazil," says the department of foreign affairs.

Formal diplomatic relations between the two countries date back to 1948. Brazil was, in later years, at the forefront of calls for the isolation of the apartheid government, said a foreign affairs statement. "Since the transition to a democratic South Africa, bilateral relations between South Africa and Brazil have normalised rapidly, and evolved to a level that could be described as strategic."

The first meeting of a joint commission created to boost bilateral co-operation took place in Brasilia in August. South Africa considers Brazil as a strategic country being the largest economy in South America and playing a prominent role in world diplomacy, the department said. Among other things, Brazil has been a driving force in the promotion of South Africa's relations with countries that make up the South American trade bloc, Mercosur.

Brazil - SA's biggest Latin America trading partner "In view of Brazil's historical link to Africa and its large population of African descent, Brazil is potentially a significant partner in achieving the objectives of Nepad (the New Partnership for Africa's Development)." The department said Brazil was South Africa's biggest trading partner in Latin America. South African exports to that country reached their peak in 1996 with a total of $414 million.

More than a quarter of this figure was represented by industrial alcohol, which Brazil used in its fuel pool. South African exports to Brazil for the following four years were $367 million, $278 million, $172 million and $228 million respectively.

Major South African exports to Brazil included precious and semi-precious stones, metal, anthracite and coal, iron and steel, chemical products, organic chemicals, aluminium, nickel, synthetic fibres, machinery and mechanical appliances, paper and paperboard. Imports from Brazil increased by almost 85% between 1993 and 1997. In 2000, exports to South Africa stood at $302 million a trade surplus of $74 million in Brazil's favour. South Africa imported from that country mostly vehicles and vehicle components, aircraft, machinery, mineral fuels, electrical machinery, animal and vegetable fats and oils, meat, ores, organic chemicals and tobacco. - Sapa

President George W. Bush today announced his designation of four individuals to represent the United States at the Inauguration of His Excellency Luiz Inacio Lula da Silva, President of the Federative Republic of Brazil, on January 1, 2003.

The Honorable Robert Zoellick, United States Trade Representative, will serve as the leader of the delegation.

The Honorable Donna Hrinak, U.S. Ambassador to Brazil The Honorable Michael B. Enzi (R-WY), United States Senate The Honorable John Maisto, Special Assistant to the President and Senior Director for Western Hemisphere Affairs, National Security Council

Reuters, 12.30.02, 2:24 PM ET By Hugh Bronstein

NEW YORK, Dec 30 (Reuters) - Emerging market sovereign bond trading ground to an early close on Monday as investors worried about what 2003 might bring Venezuela, where a month-old strike has nearly shut down the economy.

Trading was light ahead of the new year -- one trader commented that he did not even have his computer screens turned on -- even as the political turmoil in Venezuela, the world's fifth-largest oil exporting nation, deepened.

"Venezuelan bonds are vulnerable to more weakening because the situation in the country is deteriorating," said Lawrence Krohn, head of Latin American sovereign research at ING Financial Markets.

The opposition threatened on Monday to add more civil disobedience and a tax boycott to a work stoppage that has blocked oil exports but so far failed to make President Hugo Chavez resign.

The leftist leader has thumbed his nose at massive marches, one of which brought a million demonstrators onto the streets of Caracas.

"There's no chance of a near-term resolution," Krohn said. "Chavez is getting angrier and angrier and the people of Venezuela are getting poorer and poorer."

Emerging market bond spreads widened by 10 basis points to 783 over U.S. Treasuries, according to JP Morgan's Emerging Markets Bond Index Plus. Venezuela's portion of the index widened 16 basis points to 1,120.

Wider spreads reflect the perception of increased risk as measured against safe-haven U.S. Treasury bonds.

The opposition demands immediate elections and has refused Chavez's offer of a referendum on his rule in August, which he says is the earliest date allowed by the constitution.

Chavez was elected in 1998 after a campaign in which he vowed to wrest control from the country's corrupt elite and enact reforms to help the poor. But opposition has grown amid charges the president wants to establish a Cuban-style authoritarian state. Many investors say Chavez, notorious on Wall Street for his failed economic policies and anti-capitalist rhetoric, is probably on the way out and that Venezuelan bonds are poised to rally, as happened in April following a short-lived coup against Chavez. But investors are fooling themselves if they assume Venezuela will undergo an instant economic renaissance when and if Chavez is pressured out of office, Krohn said.

"It is not as if there is some very competent leader who is poised to take over. The opposition has nobody like that," he said. Venezuelan debt has rewarded holders with total returns of 18.79 percent in 2002, compared with the 14.16 percent rise in the overall market, according to the EMBI-Plus. But as the strike eats into the country's oil and Christmas season tax revenues, Venezuelan total returns have dropped 3.29 percent so far in December.

BRAZIL AWAITS LULA'S INAUGURATION The market will watch for any signals on Brazil's future economic policies from President Luiz Inacio Lula da Silva, who takes office on Wednesday.

The one-time radical union boss turned his rhetoric toward the political center to win October's election. Now investors want proof that Lula will properly manage Latin America's biggest economy. Brazil's central bank forecast 2.8 percent growth in gross domestic product in 2003, up from an estimated 1.6 percent this year.

     WASHINGTON, Dec. 30 (UPI) -- Capital Comment -- Daily news notes, political rumors and important events that shape politics and public policy in Washington and the world from United Press International.            Graham cracker...      Sen. Bob Graham, D-Fla., says he might run for president in 2004. If he does run he starts off as a dark horse even though Florida, now with 27 electoral votes, is a political powerhouse. With a reputation as a moderate Democrat, Graham has spent almost his entire adult life in politics, serving in the state legislature and as governor for eight years before joining the senate in 1986. A late entry into the field of prospective candidates Graham would start off well behind the nominal frontrunners, Sens. John F. Kerry, D-Mass., and Joseph Lieberman, D-Conn.

     If Graham does run in 2004 then he would likely have to surrender his seat in the U.S. Senate. He has to run for re-election in 2004 and Florida law does not permit a two-track campaign. The pressure will be on for him to choose his race and to choose it early if the Democrats hope to hold on to the seat -- something many analysts say would be difficult in light of the way Florida has been trending Republican for the last ten years.

     A natural candidate for the vice-presidential slot, Graham may be taking about a presidential bid as a graceful way to ease himself out of the senate rather than retire outright.

     -0-      Hard time...      In one of his final acts as Michigan's chief executive, outgoing Republican Gov. John Engler has signed several pieces of legislation repealing the state's mandatory minimum drug sentences. Laura Sager, executive director of Families Against Mandatory Minimums, a special interest group leading the fight for repeal, praised the move, saying it brought " a quarter-century of failed sentencing policy to a close."

     "Harsh mandatory minimums, originally intended to target drug 'king pins'warehoused many nonviolent, low-level drug offenders at a very high cost to taxpayers. Now judges can use their discretion under sentencing guidelines to more closely fit the punishment to the crime and the offender," Sager said.

     Engler's signature on Michigan Public Acts 665, 666 and 670 of 2002 eliminated most of what opponents called "Draconian mandatory minimum sentences" in favor of judicial discretion in sentencing based on a range of factors in each case, rather than solely drug weight.

     -0-      Out...      Rep. Joe Wilson, R-S.C., who had been considered the front-runner in the race for the 2004 GOP nomination for U.S. Senate has announced he will not make the race. His withdrawal leaves the field wide open -- with former U.S. Rep. Tommy Hartnett, former state Attorney General Charlie Condon and current U.S. Rep. Jim DeMint most often mentioned as potential challengers to Democrat Sen. Ernest 'Fritz' Hollings, who is finally the state's senior senator after 36 years.

     -0-      Flying down to Rio...      On Monday the White House announced the designation of four people who will serve as representatives of President George W. Bush at the Jan. 1, 2003 inauguration of Luiz Inacio Lula da Silva, the new president of the Federative Republic of Brazil.

     The delegation will be led by Ambassador Robert Zoellick, the United States Trade Representative, and will also include U.S. Ambassador to Brazil, Donna Hrinak, U.S. Sen. Michael B. Enzi, R-Wyo., and John Maisto, special assistant to the president and senior director for western hemisphere affairs on the staff of the National Security Council.

     -0-      Poll watch...      A FOX News/Opinion Dynamics poll of 344 Democrats across the country has New York Sen. Hillary Rodham Clinton at the top of the list of preferred presidential nominees for 2004. Though Clinton has said repeatedly through aides that she would not be a candidate, she nevertheless got the support of 21 percent of the survey's respondents. The next candidate on the list, at 18 percent, is Connecticut Sen. Joseph Lieberman, the party's vice-presidential nominee in 2000.

     Rounding out the top tier are Sen. John F. Kerry, D-Mass., at 16 percent, Senate Minority Leader Tom Daschle, D-S.D., at 6 percent, and U.S. rep. Dick Gephardt, D-Mo., at 5 percent. Also winning votes were Sen. John Edwards, D-N.C., former Vermont Gov. Howard Dean, and the Rev. Al Sharpton while 'Not sure' was the choice of 20 percent of participants.

     -0-      UPI's Capital Comment will not be published on Dec. 31, 2002 or Jan. 1, 2003. Happy and safe New Year to all our readers.

• Various Latin American presidents confirm attendance www.granma.cu

BRASILIA.- VARIOUS heads of state have confirmed their presence at the January 1 investiture of Luiz Inacio da Silva as president of Brazil, including five from South America (at the close of this edition). The information was given by the Brazilian Foreign Ministry and published by AFP.

The country’s Ministry of Foreign Affairs has already confirmed the attendance of Presidents Eduardo Duhalde, Argentina; Jorge Batlle, Uruguay; Gonzalo Sánchez de Lozada, Bolivia; Alejandro Toledo, Peru; and Jorge Sampaio, Portugal.

A diplomatic source states that despite his country’s political crisis, Venezuelan president Hugo Chávez has guaranteed that he will be in Brasilia on the first day of the New Year.

Other presidents expected in Brazil are Goran Persson, Sweden; Said Nuzio D’Angieri, Belize; and Samuel Hinds, Guyana. Prince Felipe of Bourbon will represent Spain.

Lula and his Workers Party tried to change the investiture date so that more foreign heads of state could attend along with other governors-elect. But parliament would not accept that the date be changed to January 6, one day after provincial governors take their seats.

Despite the fact that the date is not favorable for the authorities remaining in the capital, the expectation of PT leaders is that more than 150,000 people from all the Brazilian states will attend the ceremony. Fernando Henrique Cardoso will hand over his position to left-wing president-elect Lula, who is to govern Brazil 113 years after the Proclamation of the Republic (November 15, 1889).