news.ft.com By Raymond Colitt in São Paulo Published: January 22 2003 19:36 | Last Updated: January 22 2003 21:30

Brazil's central bank surprised financial markets on Wednesday with an increase of its prime lending rate by 0.5 per cent to 25.5 per cent in a move to showcase tough inflation control.

It was the central bank's first interest rate decision since Luiz Inácio Lula da Silva (PT) took office as president on January 1. Most financial market analysts welcomed the move as a sign the central bank was willing to take unpopular measures to secure inflation.

The announcement did little to stem the currency on Wednesday, which fell more than 1 per cent to R$3.53 against the dollar,  due in part to ongoing fears in global markets over the threat of war in Iraq.

It is the fourth consecutive interest rate increase since October totaling 7.5 per cent and is certain to rekindle criticism by businesses fearing a further slowdown in economic activity.

Despite signs of slowing inflation, the central bank said on Wednesday, higher interest rates were required to bring price increases in line with official targets.

The rate increase came even though the central bank on Tuesday relaxed its inflation target from a maximum of 6.5 per cent to 8.5 per cent this year. In 2004 it aims for inflation to reach 5.5 per cent, compared to a target of 3.75 per cent with a margin of plus or minus 2.5 per cent.

The central bank had argued that tighter monetary policy this year would have a disproportionately negative impact on economic growth. An inflation target of 6.5 per cent, for instance, would imply a contraction of gross domestic product by 1.6 per cent.

The new inflation target, by contrast, would permit GDP growth of up to 2.8 per cent assuming equal conditions in both scenarios.

www.fox29.com

PORTO ALEGRE, Brazil (AP) _ Globalization foes were flocking to Brazil for the World Social Forum, the annual protest against the World Economic Forum held simultaneously at a Swiss ski resort.

The six-day event begins Thursday in the far southern city of Porto Alegre. As many as 100,000 activists are expected to attend from countries as diverse as Egypt, India and the United States.

The third annual social forum was featuring Brazil's new president, Luiz Inacio Lula da Silva _ the country's first elected leftist leader who on Friday will become the first government leader ever to personally address the forum. Government officials previously had been excluded.

Silva will then fly to Davos, Switzerland, to participate in the economic forum, which is expected to attract 2,000 business and government leaders.

The landslide election of Silva, a former radical union leader, in October was seen as a rejection of the free-market policies of his predecessor Fernando Henrique Cardoso.

Social forum participants say their opposition to unfettered American-style capitalism should strike a responsive chord this year. The summit follows a year of unprecedented business scandals involving multinational corporations, many of them with headquarters in the United States.

"Washington always preaches to the developing world about eliminating corruption and the rule of law," said Mark Weisbrot, an economist who co-directs the Center for Economic and Policy Research in Washington, D.C. "Here you see the United States has experienced corruption that is worse than anything in developing countries."

Participants will crowd into a soccer stadium and Porto Alegre's Catholic University for hundreds of panel discussions, debates and seminars on themes ranging from corporate misdeeds to the Third World's foreign debt.

They can also dance at a concert by Brazilian pop superstar Jorge Ben Jor, attend Japanese Noh theater presentations or even see a drag queen show.

Prominent activists attending the forum include actor Danny Glover, anarchist and linguistics professor Noam Chomsky and Aleida Guevara, the daughter of legendary guerrilla leader Ernesto "Che" Guevara.

French anti-globalization activist Jose Bove said Wednesday he had no plans to create disruption as he did at the first forum in 2001 _ when he led the invasion and occupation of a farm owned by U.S. agribusiness giant Monsanto. Brazil made him leave the country.

Bove, a farmer who became famous in 1999 when he and nine others used farm equipment to dismantle a French McDonald's under construction, said there's no need now that Silva is in power.

"Things have changed in Brazil," he said.

Activists also are using the forum as a way to draw media attention to their opposition to a possible U.S.-led war against Iraq.

People at the economic forum in Davos should take notice because the world economy will suffer if President Bush decides to attack, said Rainer Rilling, a German social sciences professor with the Berlin-based Rosa Luxembourg Foundation. "We hope a war can still be avoided."

www.falkland-malvinas.com Mercosur Wednesday, 22 January

Brazilian President Luiz Inacio Lula da Silva clearly identified with the anti globalization ideas of the Porto Alegre Social Forum, this week end will be the guest star at the Davos World Economic Forum, where he will try to convince leading businessmen and industry captains to trust Brazil and keep investing in the country.

Prte. Lula da Silva His own Workers Party was instrumental in the creation of the Social Forum that emerged precisely to counter attack the globalization ideas of Davos in Switzerland.

Just a few months ago, then candidate Lula was preaching “while Davos discusses how to accumulate more wealth, we at the Social Forum discuss how to distribute more fairly; they well know (Davos) that the reigning violence in the world originates in the insensibility of the men who command the world economy”.

But now as head of an administration needy of investments and the trust of the men who command the world economy, President Lula accepted the invitation to participate in the annual Davos meeting.

And in an attempt not to contradict and irritate many of his supporters in the Workers Party and the Porto Alegre Social Forum, Mr. Lula’s ministers have assured that the president will be taking to Davos the Social Forum critical message. President Lula also promised he will be present at the World Social Forum in Porto Alegre that convenes almost simultaneously with Davos, in the south of Brazil.

However the Brazilian president already has been exposed to severe criticism from distinguished followers such as sociologist Emir Sader who in an open letter said that “Lula must not be present at the banquet of those responsible for the world’s misery; Lula must not expose his prestige in a party of bankers who are responsible for famine in Africa, Asia and here in Brazil”, said Mr. Sader.

Anyhow, besides the critical message about inhuman capitalism Mr. Lula in Davos will have to ratify his administration’s respect for Brazil’s commitments. Instead of scaring capitalists Mr. Lula will assure investors that he plans no surprises and request trust in Brazil and his administration.

President Lula’s compromising agenda has him travelling this Friday to the Porto Alegre Social Forum and Saturday and Sunday to Davos where he will be interviewed live by the men who command the world economy with former Costa Rica president José María Figueres acting as anchorman.

And to scare any possible doubts, the Brazilian president will be travelling to Davos with four Ministers, Finance, Labour, Health and Culture, plus the head of the Development Office, Luis Fernando Furlán who as previous CEO of Sadia one of the world’s largest food companies was a regular participant of the Economic Forum.

Not even former president Fernando Cardoso, who only attended Davos, ever travelled with such an impressive delegation.

“We’re not in the job of opposing the Porto Alegre and Davos forums, rather establishing a constructive dialogue”, said Labour Minister Jacques Wagner.

“If we manage a good rapport with Davos, a good credit condition, Brazil’s country risk will decrease and restrictions to investments will minimize”, indicated Mr. Furlán.

news.bbc.co.uk Thursday, 23 January, 2003, 05:30 GMT

Today's editions cover the Paris celebrations to mark the anniversary of the treaty between France and Germany. Some papers also note the summit in Davos of World Economic Forum and its counterpart in the Brazilian town of Porto Alegre. The Russian press picks up on the theme of theft, large and small.

Symbolism out, pragmatism in

France's leading daily Le Monde finds the French-German celebrations so providential that, as the paper puts it, "if the 40th anniversary of the Elysee Treaty had not existed, it would have had to be invented".

With "major challenges" ahead like the EU's "unprecedented enlargement" and the drawing up of a European constitution, the paper says, "it was about time the languishing (French-German) cooperation was revived".

But with the war more than half-a-century away, it adds, "this is no longer a time for symbolism like that of De Gaulle and Adenauer praying together at Reims cathedral, or Mitterrand and Kohl holding hands on the battlefield in Verdun".

As the paper sees it, "neither the time nor the incumbents lend themselves" to such an approach.

And in fact, it notes, the joint declaration signed in Paris on Wednesday, is so pragmatic in tone that it reads more "like the conclusions of a company board meeting".

A matter of taste

In Romania, Bucharest's Adevarul welcomes the Franco-German joint declaration in which, it writes, "the two countries mention Romania as a future member of the EU".

"The Wednesday celebration of the 40th anniversary of French-German post-war reconciliation," the paper continues, "demonstrates what a partnership at the heart of Europe was able to create in our modern time". The white wine was German and the red was French

Adevarul

"But the present French-German partnership did not consist uniquely of bilateral relations and European construction", the paper adds, and points out that "the two countries are acting jointly in the service of international security and various international bodies".

"And to show to all European countries the extend of their friendship," the paper concludes, "France and Germany extended their partnership during the celebrations to the wine list as well: the white wine was German and the red was French."

Davos & Porto Alegre

Global issues will be addressed today from standpoints as far apart as the distance between the Swiss Alpine village of Davos, where the movers and shakers of the World Economic Forum will gather today, and the Brazilian town of Porto Alegre, the regular venue of the World Social Forum.

Major West European political leaders seem to have disappeared from the forum this year

International Herald Tribune

"They have as much in common," says the French daily Liberation, "as a Swiss company's board meeting and a tropical carnival."

"On one side," the paper adds, "there will be the happy few, and on the other the legion of the discontented."

Their topic is "more or less the same", it notes, "but the languages are so different that any kind of communication would appear impossible". And yet, the paper marvels, President Luis Inacio Lula da Silva of Brazil, "one of the few speakers to have triumphed in Porto Alegre", has taken up the challenge and will address the Davos meeting.

But then, as the paper puts it, Lula is "living proof that a culture nurtured in the laboratories of Utopia is capable of facing the cruel reality of the post-industrial world".

The Paris-based International Herald Tribune says that many of the Davos forum's customary stars have been "humbled", as the paper puts it, "by accounting scandals, mismanaged mergers, personal greed or the economic downturn".

But still, it notes, "about 1,000 corporate figures have paid up to $30,000 dollars to attend the gathering, along with 1,000 other representatives from the media" and other groups, as well as "political luminaries" such as US Secretary of State Colin Powell and King Abdullah II of Jordan.

However, the paper points out, "major West European political leaders", including Britain's Tony Blair and Germany's Gerhard Schroeder, "seem to have disappeared from the forum this year".

Got a new motor?

"Many foreigners are surprised on first arriving in Moscow at the superabundance of luxury cars in our capital," writes the Russian newspaper Trud.

"They don't see this number of BMWs, Lexuses and Mercedes in Berlin, Paris or Los Angeles.

"They ought to be pleased at how wealthy Russians are becoming, but there is a big 'but': practically all the elite foreign cars belonging to Russians have either been stolen overseas or illegally brought through customs."

The numbers are staggering, Trud explains.

"In the 1990s, Interpol was looking in Russia for 2.4 million cars stolen in the West. From 2000 this number halved - the explanation is simple, they stop looking for cars over three years old... but they still call us the country of stolen cars."

Komsomolskaya Pravda reports that a press conference in Moscow by representatives of Western insurance companies noted that not more than 100 of the vehicles illegally exported to Russia have been returned to their true owners.

The police representative invited to the press conference did not show up. "Evidently we will remain a black hole in the eyes of the civilised world for some time to come," Komsomolskaya Pravda notes.

If it's not nailed down...

Local paper Vecherniy Chelyabinsk says allotments Belaya Balka near Chelyabinsk in the Urals "should go into the Guinness Book of Records for the number of thefts over the winter".

The dog was stolen together with its kennel and chain

Vecherniy Chelyabinsk

On average across Russia one in three allotment buildings is burgled over the winter: the average for Belaya Balka is for every one to be burgled twice a season.

The gardeners got together and took decisive action.

"They brought in a specially-trained guard dog from Chelyabinsk, which was capable of tearing any intruder to tiny pieces.

"On its first night on duty, the dog was stolen together with its kennel and chain."

The European press review is compiled by BBC Monitoring from internet editions of the main European newspapers and some early printed editions.

www.novinite.com Politics: 23 January 2003, Thursday. Bulgaria's Finance Minister Milen Velchev will participate in the World Economic Forum to take place January 23-28.

At the forum Minister Velchev will talk on the businessmen's ability to become good politicians and the remuneration of the presidents and executive directors of companies. The Forum aims to prompt discussions, not to yield concrete results, Minister Velchev said in Sofia.

The political and business elite have already begun gathering in the exclusive Swiss ski resort of Davos for the annual meeting. Corporate scandals and the possibility of war with Iraq will be the two issues dominating this year's World Economic Forum.

Top billing goes to the US Secretary of State, Colin Powell, who will deliver a "major speech" on US foreign policy at the weekend. Other political figures likely to make the headlines include Presidents Luiz Inacio Lula da Silva of Brazil, Vicente Fox of Mexico and Johannes Rau of Germany.