This article appears in the November 8, 2002 issue of Executive Intelligence Review. by Our Special Correspondent www.larouchepub.com

The electoral victory of Workers Party (PT) Presidential candidate Luiz Inácio "Lula" da Silva, with more than 50 million votes—the greatest proportional vote in Brazil's history—confirms what had been evident from the first round of the elections: that the nation is avid for a change from the neo-liberal, monetarist economic model, which has been in force since 1990 and has brought about a state of public calamity: the highest unemployment in history, the destruction of the public and private patrimony, the abandonment of the main urban centers to organized crime, and the trapping of the nation in an out-of-control debt bubble, increasingly dollarized, which has brought Brazil—with its $500 billion in total foreign obligations—to the brink of default.

The big question now, is whether the Lula government will represent a genuine transformation, or if all the hope his candidacy has engendered will be betrayed by continuing the policies of the previous administrations, albeit with a "social democratic" façade. Worsened by the terminal crisis of the international financial system, this would be a bitter deception.

No Compromise Possible

As is widely known, all of the campaign promises of the President-elect, especially those related to the generation of 10 million jobs, recovery of industrial and agricultural capabilities, reinforcement of social programs, and an increase in wages, are openly contradictory to the commitments and agreements made with the International Monetary Fund (IMF) and the international creditor banks. Today, for example, the liquid debt of the public sector is nearly 65% of the Gross Domestic Product, which means that merely servicing that debt will wipe out any effort to direct the resources of the national budget into the promised projects for recovery. The commitment to continue with the IMF's policies of fiscal austerity means complying with the new demands to raise the primary budget surplus (all of the budget excluding debt payments) to a level equivalent to 5% of GDP, a dramatic increase in sacrifice required, from the current level of 3.8%.

Thus, any effort to fulfill Lula's campaign promises will necessarily lead to a rupture with the collapsed world monetary system, and with the whole system of globalization. As several political analysts in Brazil have already noted, the only way that the new President will not disappoint his electorate, would be that he step forward as the true leader of the nation, and announce the impossibility of maintaining the genocidal agreements with the IMF and the sacrifice which that would mean for the population.

If Lula opts for temporizing, and imposes even greater fiscal austerity, however, he will compromise the social stability of the country, since there is no way that his promises can be met through submission to a so-called "globalization with solidarity"—a euphemism for trying to accommodate the Marxist belief structure of important sectors of the PT, within the hegemonic global order.

London and Wall Street are applying brutal pressure upon Brazil, demanding that the President-elect immediately name his finance minister and central bank president, and that the team make clear that it will implement an even more harsh austerity than the outgoing Cardoso government could. As the investment firm of Morgan Stanley bluntly put it: "Delays in the commitment to a more severe fiscal policy will negatively affect the market." Because there "is a very real risk of default," the London Times editorialized on Oct. 30, Lula must use his broad base of support to "sell difficult reforms" to both the elites, as well as the impoverished millions who voted for him. So, too, the same day, the Washington Post threatened that if Lula follows the wrong policies, he could "trigger a messy debt default [which] would be a disaster for Brazil, and especially for Mr. Da Silva's supporters."

Yet, if a break with the system is not concretized by the new government in its first few months, the disillusion of the electorate will be as great, and as resounding as Lula's election victory itself. It will leave the country at the mercy of the radicals within the Workers Party, and of Jacobin groups such as the Landless Movement (MST), which, together with a constellation of non-governmental organizations and groups linked to the World Social Forum, will unleash the hordes which Italian terrorist Antonio Negri speaks of in his book Empire, the bible of the Pôrto Alegre World Social Forum. MST leader João Pedro Stedile interprets Lula's election victory as a product of "the people's mobilization," and has already announced that he will mobilize his base to keep up the pressure on the next government. Behind the demagogy, is a project to finish the destruction of the sovereign nation-state, in submission to the emergence of an Anglo-American world empire.

It is important to note that the strategy of the international financial oligarchy is to intentionally provoke chaos, as a means of bringing about the disintegration of the nation-state and its institutions. The international creditors are fully aware that their efforts to collect a debt which is physically uncollectable, will unleash chaos. And they have their controlled movements, such as the MST, to guarantee these results.

A Mandate to Save the Nation

The "Utopian" faction inside the U.S. government has circulated the rumor that, with Lula's election, Brazil will join an Ibero-American "axis of evil," which includes Cuba and the Venezuela of Hugo Chávez. But Brazil is not Venezuela, and Lula is not another Chávez—no matter how they both dub themselves leftists. Chávez is a philosophical fascist, with his expressions of extreme Jacobinism and his explicit defense of Carl Schmitt, the brains behind Adolf Hitler's "legal system." Lula is something else: He has formed a broad national coalition, which undoubtedly includes radical Chavista elements (the MST, for example), but which also includes genuinely nationalist elements—and what direction this coalition will ultimately take has yet to be defined.

No one, either inside or outside Brazil, should fool themselves about the real message delivered at the polls: The Brazilian electorate voted for a political figure who embodied the aspiration for a decisive change from the status quo, and not specifically for a political party, much less for the radical factions inside the PT. This is clearly seen in the defeats suffered by the PT in gubernatorial contests for the most important states in the country, above all, the largest: São Paulo, Minas Gerais, Rio de Janeiro, and Rio Grande do Sul.

The defeat of the PT in its bid to re-elect its governor of Rio Grande do Sul, is particularly significant, because that state became the headquarters of the World Social Forum under the PT, and that is where the MST conducts its most bellicose actions.

Likewise, the record, 1.56 million-person Congressional vote for Dr. Enéas Carneiro, a nationalist who has campaigned unwaveringly for 13 years on the grounds that Brazil can only survive and develop if it breaks with the IMF, reflects the same message. Dr. Enéas, who hosted Lyndon LaRouche's visit to São Paulo in June, is no Jacobin. As he told Folha de São Paulo, on the eve of the second election round: "I will be on the side of the President, whoever is elected, in everything which favors the population, and against all those actions which are against its welfare.... The polarity today is between the globalized world and the sovereign nation-state. My group defends the existence of the sovereign nation-state, and this will be our fight."

And so the new President was sent the following message: The country hopes that the necessary break with the neo-liberal economic model will not mean a new Jacobin-style "French Revolution," but rather a defense of the sovereign nation-state. This historic crossroads cannot be avoided, for it is the same that today faces the entire world. It is necessary that the President-elect understand this message well, for Brazil to maintain even minimal institutional stability over the coming months.

BY CARLOS A. DEJUANA Reuters www.bayarea.com SAO PAULO, Brazil - Luiz Inacio Lula da Silva makes his first trip abroad as Brazil's president-elect this week, traveling to Argentina and Chile to strengthen regional ties before a U.S. visit a week later.

A little more than a month after his election victory, the trip will be a test of whether the former union leader can recreate his surprising success at home on the international front. He leaves for Buenos Aires on Sunday night.

Throughout his campaign Lula stressed the importance of rebuilding trade links between Brazil and its Latin American neighbors, which are comparatively small and have been hit recently by economic and political turmoil.

"It's a reaffirmation, a reconsolidation of the entire regional trade bloc," said Marcelo Salomon, chief economist at ING Bank in Sao Paulo.

Lula and a small team of advisors are scheduled to meet with Argentine President Eduardo Duhalde on Monday and Chilean President Ricardo Lagos on Tuesday. He will meet with President Bush on Dec. 10.

FREE TRADE NEGOTIATIONS

At the heart of Lula's determination to strengthen South American ties is the desire to put up a common front against the United States in negotiations to create a free trade area that would stretch from Alaska to Argentina.

Lula has made it clear that Brazil, which is by far the region's largest economy and the linchpin in the proposal, will fight a tough battle to make sure its exporters get as good a deal as U.S. companies. Brazilians have long been irked by U.S. tariffs that put limits on key exports such as orange juice, sugar and textiles.

But cementing trade ties with some neighbors like Argentina will be difficult given the region's economic woes and political instability. Argentina, whose economic crisis the past two years battered Brazil and Paraguay and crippled the Uruguayan economy, will have elections in April of next year.

And trade relations between those four countries that make up the Mercosur trade bloc have already been strained by ongoing commercial spats.

Brazilian exports to Mercosur fell by more than half to $2.7 billion, or 5 percent of the total, in the 10 months to October this year compared with a year earlier.

Still, analysts say a united bloc will give the region more leverage in the negotiations.

"What (Lula) wants to say is that Mercosur is important and that, despite the difficulties, it's going to continue to be important, and that's key in trade talks with the European Union and United States," said Ricardo Caldas, a political scientist at the University of Brasilia.

RIDING HIGH AT HOME

At home, Lula has been beating expectations, say analysts.

Lula and his transition team have proved to be more fiscally conservative than expected by anxious investors, fueling a small recovery at Brazilian markets that were earlier battered by worries the former metalworker would mismanage the economy.

The benchmark Bovespa stock index rallied 3.4 percent in November, and the country's much maligned currency, the real, has been trading steady since the election after taking a beating for months.

Moreover, Lula has struck governability deals with political rivals and held off the radical wing of his leftist Workers' Party, known as PT, pleasantly surprising even his harshest critics.

"One of the key challenges for the PT government will be overcoming the credibility deficit they have with the market, and they have been doing that very well," said Christopher Garman, a political analyst at Tendencias, a Sao Paulo consulting firm.

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.