Fri January 3, 2003 02:11 AM ET www.worldtribune.com

BRASILIA, Brazil (Reuters) - Brazilian Finance Minister Antonio Palocci kicked off his first day on the job on Thursday with an impassioned pledge to fight poverty and promised to unveil market-friendly economic targets next week.

Speaking at ceremony to mark his assumption at the ministry, the former physician said Brazil lived "the paradox of a state that spends a lot, but in which few benefit."

Palocci promised his ministry would improve the management of the country's public finances to begin alleviating the poverty that afflicts almost one in three Brazilians.

Seeking to assuage investor concerns the new left-wing government will stray from the path of orthodox economics, Palocci reiterated his commitment to prudent policies.

"We are going to preserve fiscal responsibility, the control of inflation and our floating exchange rate. We are not going to reinvent the basic principles of economic policy. We, in fact, have a much more ambitious project: to reinvent the Brazilian state and its place in society," Palocci said in his first speech as the new economy chief.

Palocci, who like many in the new government sports a beard, said the ministry would unveil its economic targets for 2003 next week.

"Those goals will make clear our commitment to a responsible and consistent administration of budgeted funds," said the former Trotskyite.

"THE NECESSARY SURPLUS"

Brazil is expected to have ended 2002 with a healthy fiscal surplus that should beat the 3.75 percent of gross domestic product mandated under its $30 billion loan agreement with the International Monetary Fund.

But its nominal budget balance, which includes hefty debt payments, is running in the red, meaning the government must make up the difference by issuing debt that in turn further skews the fiscal balance and worries investors.

Palocci was adamant about the new government's commitment to keep its debt payments under control.

"We will pursue the primary surplus necessary to guarantee without a doubt the sustainability of Brazil's public debt," he said.

On Wednesday, Palocci named a Cabinet that includes a mix of career economists and current government officials.

His deputy, Executive Secretary Bernard Appy, is a 40-year-old economist who used to advise the Workers' Party at Congress. Otaviano Canuto, the secretary for international affairs, is a professor at the University of Campinas and University of Sao Paulo specializing in foreign finance.

Secretary for Economic Policy Marcos Lisboa, 38, holds a doctorate in economics from the University of Pennsylvania and teaches at the well-respected Fundacao Getulio Vargas think tank.

Jorge Antonio Deger Rachid will become head of the income tax department, where he was the deputy secretary under the previous administration.

By Claudio Campuzano SPECIAL TO WORLD TRIBUNE.COM

November 3, 2002

More than one hundred million Brazilians went to the polls on Oct.27 and for the first time in the country's history they chose as president the working-class candidate of a leftist party. How many times have you read this in the past week?

Read now this alternative description of what happened.

More than one hundred million Brazilians went to the polls on Oct. 27 and, over the opaque government-sponsored, centrist candidate, chose as president a charismatic leader who, during his campaign, had moved to the center, away from his party's left.

The "working-class" tag hung on Luiz Inácio da Silva, universally known as Lula, is meant to denote his humble origins as a tapioca salesman and lathe operator, the equivalent of an American politician's log cabin. But 56-year-old Lula has not punched a factory's time clock in the last three decades. Since 1975 he is a full-time, salaried union president. He has been a member of the federal Chamber of Deputies and has run, unsuccessfully, for the governorship of São Paulo (once) and for the presidency (three times). He lives in one of three apartments he owns in São Bernardo do Campo, a nice middle-class suburb of São Paulo, and owns a weekend property.

In other words, as a top labor union official and regular player in state and national elections, Lula has been recognized for the last quarter-century as a full member of Brazil's political establishment as much as José Serra, the candidate of President Fernando Henrique Cardoso's centrist coalition he trounced in the runoff election by wining 61 percent of the vote.

We said here before that Brazil would not vote for candidate of the hard left. It didn't. A majority of Brazilians voted for a Lula that had moved to the center, but not equally so for a patently leftist Workers' Party (PT) which has not showed signs of following the same path-at least not yet.

"Lula's candidacy was much bigger than the party," said Benicio Schmidt, a political scientist in Brasilia, the capital. "His support didn't revert to candidates in the states."

Indeed, despite Lula's overwhelming personal victory, his Workers' Party fared poorly in state elections, taking just three of 27 gubernatorial races. It faces opposition governments in economically powerful Minas Gerais and in São Paulo, Brazil's richest and most populous state-where Lula launched his political career-and a governor from the PT lost his bid for reelection in Rio Grande do Sul state, long a showcase for the Workers Party, and whose exports play a major role in Brazil's economy.

These are three of the four states in Brazil with the largest population (the other is Rio de Janeiro, whose main business is tourism). And Brazíl is the only truly federal country in South America. It was a moratorium on interest payments decreed by Minas Gerais's governor that sparked the currency crisis that forced Brazil to abandon its crawling peg in favor of a floating exchange rate in 1999-and half a dozen of the states have called for a reduction in debt payments to Brasilia.

In São Paulo, for example, Lula gathered slightly over 11 million votes and Serra almost 9 millon, but the figures were inverted in the governorship race, in which the WP's candidate got around 8.5 million votes against almost 12 million that went to the winning candidate from Serra's party, the Brazilian Social Democracy Party (PSDB).

The same phenomenon could be seen in almost all of Brazil. The flip side of Lula's overwhelming victory was an equally ovrewhelming defeat of the PT in the state elections. The party could only get reelected one of its eight candidates that were seeking a second period, in Mato Grosso do Sul. In all, it gained governors in three states (Piaui and Acre were the other two) of scarce political weight and modest electorates-a total of 3.6 million voters, 3 percent of the national electorate.

The PSDB, that the PT is labeling as the "great loser" of the election, gained governorships in seven states, among them the most important in the nation, whose electorates add up to more than 52 million votes, almost half of the national total. And the Brazilian Democratic Movement Party (PMDB), the PSDB's only formal ally in the election, obtained another five governorships, in states where 24 million Brazilians live.

Furthermore, voters were very careful in leaving the Workers' Party far away from having a majority in either house of Congress. In both they would need, at a minimum, the votes of two parties with large blocs to have their proposals approved.

The significance of this voters' message has been well understood by the PT's president, José Dirceu, even before the final results of the second round were known.

"The left is the route for the PT," he said, "but Brazil voted for alliances and the party put together a center-left alliance. Therefore, it is necessary to respect the nation's will."

With a small minority in Congress, Lula will have to put together a coalition government. This is already being resisted by many in his party (Lula has moved to the center but the rank and file as well as the intermediate officials of the PT have not) and by the powerful and more-to-the-left so-called Landless Movement that helped elect him.

In choosing Lula, Brazilians believed in the political pilgrimage to the center he completed with his presidential campaign. What gives credence to it is that, like current president Fernando Henrique Cardoso, Lula is, above all, a product of São Paulo, Brazil's capitalistic enclave-the place that attracts those who want to forge their own destiny. Nowhere else in Brazil are there as many opportunities, so much social mobility and the high degree of discrimination rejection that is necessary to allow someone to raise himself, in a little over 50 years and without running into any insurmountable obstacle, through the whole spectrum of social classes, from one extreme to the other.

It was this that the Brazilian electorate elevated to the presidency of the nation, not class war, intolerance or anti-capitalism, which it carefully put aside with its measured and thoughtful vote.

It is being said in Brazil that, at the time when Brazilians were looking for a new departure, what happened is that a lackluster José Serra, with nothing new to offer, lost to a charismatic Lula who suggested new approaches to socio-economic concerns and who succeded because he chose to bet on pragmatism and abandon the traditional dogmas of his party.

Many ask whether Lula is the old wolf in sheep's clothing. But if he were, one way of helping him to keep this clothing on is for the opposition he faces in major states' governments and in Congress to be constructive and cooperate with him in achieving the social and economic goals he set for Brazil.

Claudio Campuzano (claudio-campuzano@hotmail.com) is U.S, correspondent for the Latin American newsweekly Tiempos del Mundo and editorial page editor of the New York daily Noticias del Mundo. He writes weekly for World Tribune.com

`La gran batalla? dejó 2 muertos LUIS MARTINEZ EL UNIVERSAL

Miles de manifestantes se dirigieron desde varios puntos de la ciudad hacia Los Próceres para seguir protestando contra el Gobierno. Pero el enfrentamiento de chavistas y la oposición en el distribuidor La Bandera, junto con la acción de la Policía Militar y la Guardia Nacional dejó como resultado previsible más de 70 personas asfixiadas, por lo menos 30 heridos por pedradas y otros por armas de fuego Una anciana se enfrentó a los policías militares que impidieron el paso de la multitud hacia Fuerte Tiuna

Primera marcha del año, primer parte de guerra. No muy distinto parece haber comenzado el 2003 con respecto a su predecesor. La manifestación, llamada `La Gran Batalla? hizo honor a su nombre cuando afectos al Gobierno se apostaron en el distribuidor La Bandera y miembros de la oposición se enfrentaron primero a insultos, luego a pedradas (del oficialismo lanzaron la primera piedra) y luego, para tratar de restablecer el orden, intervino la Policía Militar y la Guardia Nacional con su tradicional ración de bombas lacrimógenas y perdigones para ambos lados de los manifestantes.

El `enfrentamiento? dejó como saldo dos muertos por arma de fuego: Jairo Gregorio Morán, (23), con herida en la región lumbar izquierda y Oscar Aponte Gómez, (24), con herida en la parte izquierda del cuello. También fue baleado Sergio Carreño, de 33 años, con herida en el muslo izquierdo. En total fueron ocho los heridos por armas de fuego y hubo más de 70 asfixiados por las lacrimógenas, y alrededor de 30 con contusiones por piedras o botellazos.

Douglas Arocha, de 23 años, personal de Protección Civil de la Alcaldía Mayor, recibió un balazo en el abdomen; Pedro Córdova, de 33 años, del personal de Salud de la Alcaldía de Chacao, recibió un impacto en la pierna derecha; José Guillermo Prieto, de 26 años, fue atendido en el hospital Vargas por una herida de bala en el codo derecho. El cuarto herido por arma de fuego responde al nombre de David Grozzi.

Pero los civiles no fueron los únicos heridos. Cuatro policías metropolitanos y una funcionaria de Policaracas también deben agregarse a esta lista, uno de ellos por herida de bala: el cabo Molina Filadelfia, los demás recibieron diversas contusiones, como el distinguido Luis Hurtado, quien resultó herido por una piedra en el maxilar derecho, el policía Douglas Capote fue atendido por una pedrada en la cabeza y el distinguido Cedeño sufrió una contusión en la cabeza. La funcionaria de Policaracas no fue identificada, pero resultó con una herida en la cara al ser golpeada por un fal de un guardia nacional.

Ellos sí, nosotros no

Ante estas agresiones, el gobernador del Estado Miranda, Enrique Mendoza, condenó los hechos y señaló de manera irónica que `cuando montaron la fritanga, el gaitazo ese, con aguardiente y todo, sí había el permiso correspondiente?.

La marcha opositora tuvo que parar la caminata a la altura del edificio de la Procuraduría General de la República por un cordón de guardias y policías militares que impidieron la llegada de los manifestantes a los monolitos de Los Próceres. El coronel José Rodrigo Pantoja, comandante de la Policía Militar, justificó el hecho alegando que la manifestación no fue autorizada hasta la zona militar. Explicó que una cosa muy distinta es que la gente vaya a Los Próceres a hacer ejercicio y pasear y otra una movilización que ha sido anunciada como la gran batalla?. Señaló finalmente que ellos como militares respetan el derecho constitucional de manifestar libremente siempre y cuando se esté apegado a la ley?, por eso acordonaron el sitio hasta la Procuraduría y cuando algunos manifestantes trataron de violentar la alcabala de militares, se produjo la acción disuasiva.

Isabelle de Rezende World Press Review Brazil correspondent worldpress.org

The landslide victory of  Workers’ Party leader Luiz Inácio Lula da Silva in the October 2002 presidential election was widely regarded in Brazil as a historic event that confirms the country’s full transition to democracy.

“In less than two decades, Brazil made a phenomenal transition from a dictatorship to a left-wing government,” wrote Alexandre Oltramari and Maurício Lima in Veja (Oct. 28). And from Veja’s editorial: “Lula as president shows the world that democracy in Brazil, and in Latin America by association, is not merely exercised for the sake of appearances by elites who only seek to perpetuate their own power.”

In 1952, at the age of 7, Luiz Inácio (he later officially added “Lula” to his name) da Silva, his seven siblings, and their mother, Euridice, traveled 13 days on the back of a truck to São Paulo in search of their father, Aristides, and a better life. Aristides Inácio da Silva, meanwhile, had started another family, leaving Euridice alone to raise her children.

Commentators were struck by the improbability that a man of such humble origins, who never finished high school, let alone earned a university degree, would become the democratically elected president of one of the world’s largest countries and the premier economy of South America. “Brazilian democracy was not only closed off to left-wing politicians like Lula, but also to the bearded frogs of the lower classes who did not possess university degrees,” wrote Antônio Gonçalves Filho and Guilherme Evelin in Epoca (Nov. 4). “Lula was only allowed to come into the parlors of the great houses after it became clear, in the 2002 campaign, that no other would-be prince was capable of taking the daughter of the house out to the dance and seeing the waltz through without tripping.”

Earning 55 million votes, Lula won a clear mandate from an overwhelming number of Brazilians. Brazil has been in a recession, worsened by the “crisis of confidence” brought about by a flight of foreign capital as Lula began to rise in the polls over the summer. Lula has set himself the perhaps impossible task of reconciling the needs of the people with the disparate and contradictory needs of  “the market”—balancing budgets, making loan payments on schedule, and keeping inflation down (as demanded by the International Monetary Fund and the United States). So far, his program includes bringing back growth, strengthening Brazil’s economic independence, and feeding the hungry.

In an Oct. 29 article, O Estado de São Paulo’s Vera Rosa and Wilson Tosta remarked, “Lula struck a note of caution, recognizing that problems could not be resolved overnight, and speaking of ‘austerity.’ He cited the severity of the country’s problems, but made it clear that he would invest vigorously in social programs.” A Fôlha de São Paulo editorial (Oct. 29) suggested that the government must “reduce Brazil’s dependency on increasingly meager foreign investments,...guarantee the revalorization and/or stability of the currency, which in turn would help fight against inflation, and help bring back growth.”

The Bush administration, through its ambassador, Donna Hrinak, is counting on a good working relationship with Lula’s Brazil. Speaking to Veja (Nov. 6), Inter-American Dialogue’s Michael Shifter urged both Lula and Bush to keep the radicals in check. “In Brazil,” he added, “there are PT [Workers’ Party] members who hate the idea of having waited 20 years to govern, and now have to be the United States’ little friend.”

But only weeks before the first round of the election, Lula made several publicized overtures to the IMF and to Brazil’s business community, assuring them that in the event of his victory, Brazil would stand firm by its commitments and that no massive communist-style nationalizations were at hand. This paid off. Panic did not strike the market, as had been expected when Lula won.

“The focus of our foreign policy will be economic pragmatism. We have markets to conquer and tough negotiations ahead concerning the FTAA [Free Trade Area of the Americas],” a top Lula adviser said to Veja (Oct. 28). “We are not going to create unnecessary ideological conflicts.” José Luis Fiori, writing in Carta Capital (Oct. 30) dared to dream: “Who knows, perhaps the time has come for Brazil to pursue national development along with a more democratic and inclusive society...that will come progressively closer to the welfare state of the Europeans.”

Isabelle de Rezende World Press Review Brazil correspondent worldpress.org

The landslide victory of  Workers’ Party leader Luiz Inácio Lula da Silva in the October 2002 presidential election was widely regarded in Brazil as a historic event that confirms the country’s full transition to democracy.

“In less than two decades, Brazil made a phenomenal transition from a dictatorship to a left-wing government,” wrote Alexandre Oltramari and Maurício Lima in Veja (Oct. 28). And from Veja’s editorial: “Lula as president shows the world that democracy in Brazil, and in Latin America by association, is not merely exercised for the sake of appearances by elites who only seek to perpetuate their own power.”

In 1952, at the age of 7, Luiz Inácio (he later officially added “Lula” to his name) da Silva, his seven siblings, and their mother, Euridice, traveled 13 days on the back of a truck to São Paulo in search of their father, Aristides, and a better life. Aristides Inácio da Silva, meanwhile, had started another family, leaving Euridice alone to raise her children.

Commentators were struck by the improbability that a man of such humble origins, who never finished high school, let alone earned a university degree, would become the democratically elected president of one of the world’s largest countries and the premier economy of South America. “Brazilian democracy was not only closed off to left-wing politicians like Lula, but also to the bearded frogs of the lower classes who did not possess university degrees,” wrote Antônio Gonçalves Filho and Guilherme Evelin in Epoca (Nov. 4). “Lula was only allowed to come into the parlors of the great houses after it became clear, in the 2002 campaign, that no other would-be prince was capable of taking the daughter of the house out to the dance and seeing the waltz through without tripping.”

Earning 55 million votes, Lula won a clear mandate from an overwhelming number of Brazilians. Brazil has been in a recession, worsened by the “crisis of confidence” brought about by a flight of foreign capital as Lula began to rise in the polls over the summer. Lula has set himself the perhaps impossible task of reconciling the needs of the people with the disparate and contradictory needs of  “the market”—balancing budgets, making loan payments on schedule, and keeping inflation down (as demanded by the International Monetary Fund and the United States). So far, his program includes bringing back growth, strengthening Brazil’s economic independence, and feeding the hungry.

In an Oct. 29 article, O Estado de São Paulo’s Vera Rosa and Wilson Tosta remarked, “Lula struck a note of caution, recognizing that problems could not be resolved overnight, and speaking of ‘austerity.’ He cited the severity of the country’s problems, but made it clear that he would invest vigorously in social programs.” A Fôlha de São Paulo editorial (Oct. 29) suggested that the government must “reduce Brazil’s dependency on increasingly meager foreign investments,...guarantee the revalorization and/or stability of the currency, which in turn would help fight against inflation, and help bring back growth.”

The Bush administration, through its ambassador, Donna Hrinak, is counting on a good working relationship with Lula’s Brazil. Speaking to Veja (Nov. 6), Inter-American Dialogue’s Michael Shifter urged both Lula and Bush to keep the radicals in check. “In Brazil,” he added, “there are PT [Workers’ Party] members who hate the idea of having waited 20 years to govern, and now have to be the United States’ little friend.”

But only weeks before the first round of the election, Lula made several publicized overtures to the IMF and to Brazil’s business community, assuring them that in the event of his victory, Brazil would stand firm by its commitments and that no massive communist-style nationalizations were at hand. This paid off. Panic did not strike the market, as had been expected when Lula won.

“The focus of our foreign policy will be economic pragmatism. We have markets to conquer and tough negotiations ahead concerning the FTAA [Free Trade Area of the Americas],” a top Lula adviser said to Veja (Oct. 28). “We are not going to create unnecessary ideological conflicts.” José Luis Fiori, writing in Carta Capital (Oct. 30) dared to dream: “Who knows, perhaps the time has come for Brazil to pursue national development along with a more democratic and inclusive society...that will come progressively closer to the welfare state of the Europeans.”