Posted on Fri, Jan. 03, 2003 ALAN CLENDENNING Associated Press

BRASILIA, Brazil - Breakfast with Hugo Chavez, dinner with Fidel Castro.

The first day in office for Brazil's new president, Luiz Inacio Lula da Silva, projects the image of a leftist alliance in Latin America - one that Chavez, Venezuela's president, has already nicknamed the "Axis of Good."

Such an alliance could hinder U.S. efforts to create a Free Trade Area of the Americas stretching from Alaska to the tip of Argentina by 2005.

Despite the perception of a new Latin American troika, doubts abound that Silva really wants to form a bloc with such close ties to Chavez and Castro, Cuba's leader.

But by giving Latin America's other two leftist leaders such a warm welcome a day after his inauguration, Silva gets huge political mileage in Brazil, where Castro and Chavez are revered by the far left of his party.

The United States sent trade representative Robert Zoellick to the inauguration, seen by the Brazilians as something of a snub because Zoellick suggested last October that Brazil's only trading partner would be Antarctica if it did not join the hemispheric trade zone.

Silva responded by calling Zoellick "the sub secretary of a sub secretary of a sub secretary" during his election campaign.

At the breakfast meeting, Chavez asked Silva to send technical experts from Brazil's state-owned oil company to replace some of the 30,000 Venezuelan state oil workers who have joined a crippling nationwide strike. Silva said he would consider the request.

And before dining Thursday night with Silva, Castro told Associated Press Television News that Brazilian-Cuban relations will grow stronger now that Brazil has its first elected leftist president.

Arriving at Silva's rural retreat 20 miles outside Brasilia for dinner, Castro shook hands and signed autographs for about 50 cheering Silva supporters. He did not speak with reporters.

Castro and Chavez had front-row seats in Congress at Silva's inauguration Wednesday, where an estimated 200,000 Brazilians waved red flags. Many were dressed in red and white clothes, the colors of Silva's Workers Party.

The Cuban and Venezuelan leaders had dinner together, and talked until 4 a.m. Thursday at the Brasilia hotel where Castro is staying.

But experts said Silva's efforts to accommodate Castro and Chavez in Brasilia could be carefully calculated political window dressing.

Silva angered his party's left wing by appointing fiscal moderates to key cabinet posts, but needs its help to push programs through Congress, where he lacks a majority.

"Embracing Castro and Chavez, the symbols of anti-U.S. influence in Latin America, gets Silva political capital in Brazil," said Stephen Haber, a Latin American expert at the Hoover Institution at Stanford University. "But this is a dangerous game, you go too far one way or the other and this will blow up in your face."

Silva doesn't want to scare away investors, who already sent the value of the Brazilian currency, the real, down 40 percent last summer over fears that his administration might not follow responsible economic policies.

So far, Silva seems to be pleasing his supporters without spooking financial markets. The real, which ended down 35 percent last year, finished stronger Thursday as the market reacted positively to second-tier finance ministry appointments.

Named to the posts were a mix of left-leaning, moderate and liberal economists with strong credentials, along with officials from the administration of former President Fernando Henrique Cardoso who will keep their posts.

Chavez coined the "Axis of Good" term after Silva was elected in October, hailing the victory and saying Venezuela, Brazil and Cuba should team up to fight poverty.

"We will form an 'axis of good,' good for the people, good for the future," Chavez said at the time.

But Brazilian political scientists dismissed the possibility of an "Axis of Good" being created by the meetings between Silva, Castro and Chavez.

"There is no way this represents the beginning of Chavez' 'Axis of Good' and much less the 'Axis of Evil' imagined by right-wing Americans," said Luciano Dias, a political scientist at the Brasilia-based Brazilian Institute of Political Studies.

Silva, who is popularly known as Lula, "would never even consider creating a nucleus of leftists in Latin America, he is too smart for that," Dias said.

U.S. State Department spokesman Richard Boucher would not comment Thursday on the possibility of the alliance.

Chavez left his strikebound and politically riven country despite the crippling work stoppage aimed at toppling him from the presidency of the world's fifth largest oil producer.

Silva also has a compelling reason for staying on friendly terms with Chavez: The long border the two countries share.

"Brazil worries very much about violence in Venezuela spilling over into Brazil," Haber said. "So you want to have peaceful relations with the Venezuelan, regardless of who is in charge."

During his breakfast with Silva, Chavez also brought up the idea of increasing cooperation among Latin American state-owned oil industries and set up a company called Petro-America.

"It would become a sort of Latin American OPEC," Chavez said. "It would start with Venezuela's PDVSA and Brazil's Petrobras," and could come to include Ecopetrol from Colombia, PetroEcuador from Ecuador, and PetroTrinidad from Trinidad and Tobago."

Last week, Cardoso's outgoing administration sent a tanker to Venezuela carrying 520,000 barrels of gasoline, but that barely dented shortages around the country.

If Silva decides to help Chavez with Brazilian oil workers, it probably won't accomplish much either, said Albert Fishlow, who heads Columbia University's Brazilian studies program.

"If he does it will be minimal and not enough to affect the situation," Fishlow said.

Brazilian president Luiz Inacio Lula da Silva first day in office began with an early meeting with embattled Venezuelan president Hugo Chávez and ended sharing dinner with another close friend, Fidel Castro from Cuba.

However Mr. Lula had time for interviews with other distinguished heads of government and state from Europe and Africa who participated in his inauguration ceremony in Brasilia, the first time in forty years that a left leaning president leads Brazil and the first democratic change of government in decades between elected presidents.

Mr. Lula confirmed Brazil’s support to the Chavez regime recalling that in his inaugural speech he committed his administration to “peaceful, democratic solutions in the constitutional framework of each country”.

Venezuelan opposition has been standing strong on a month long strike that has paralysed the country, including the key oil industry, and is demanding fresh elections to oust Mr. Chávez. However the Venezuelan president still has considerable support from poor masses that idolatrize him and from most Latinamerican leaders who fear “institutional adventures” and “mob rule”, even when it comes from the business community and middle classes.

After meeting with President Lula, Mr. Chávez rejected what he described as the “satanization” of Latinamerican leaders who favour reform and “peaceful revolutions”.

“There’s a revolution in South America and it’s not communist, it’s hunger”, said Mr. Chávez adding that blocked peaceful revolutions can turn into “violent revolutions”.

“The key work here is “change”, as president Lula brilliantly anticipated in his inaugural speech”, added Mr. Chávez.

Brazil under former president Fernando Cardoso supported the Chavez administration by sending an oil tanker with half a million barrels of gasoline for energy thirsty Venezuela where refineries are under strikers control.

Mr. Lula confirmed the Cardoso policy and through his Mines and Energy Minister Dilama Rousseff, revived a project to associate both countries government oil companies, Petrobras and Petróleos de Venezuela.

The Brazilian president also met with Swedish Primer Minister Goran Persson, Spain’s heir to the Crown Prince Felipe, Portuguese president Jorge Sampaio and representatives from Canada, Germany, South Africa, United Nations, among others. Mr. Lula ended his long first day over dinner with Fidel Castro, a meeting expected to last well into early Friday as both leaders enjoy talking, and the tropical night air.

Fiscal responsibility “We are going to preserve fiscal responsibility, the control of inflation and our floating exchange rate”, was the clear message from incoming Brazilian Finance Minister Antonio Palocci, one of president Lula’s closest aides and the man responsible for the “non turbulent” transition of the new administration.

While president Lula was hosting the outstanding representatives of the “left axis” that has emerged in Latinamerica, presidents Chavez from Venezuela and Fidel Castro from Cuba, Mr. Palocci insisted that “we are not going to re invent the basic principles of economic policy, rather reinvent the Brazilian state and its place in society”.

With a third of Brazilians living in poverty Mr. Lula who won by a landslide is seen as the man sent to rescue them, and in his inaugural speech publicly committed himself to fight hunger and ensure all Brazilians three meals a day, “if in four years I accomplish this, I will have fulfilled the mission of my life”.

With his strong message of basic economics Finance Minister Mr. Palocci was only following the new Brazilian president’s promises of change, employment and a fairer wealth distribution for the 175 million Brazilians, which Mr. Lula described in his inaugural speech as “change, with courage but also with awareness”.

Even before his election Mr. Lula had agreed to honour the International Monetary Fund’s terms that include a 3,75% primary budget surplus, a stable currency that should help ensure foreign investors that Brazil will respect a crippling debt burden of over 260 billion US dollars. In exchange the IMF promised a 30 billion US dollars credit, with a first disbursement in 2002.

Mr. Palocci and the incoming Central Bank president, a former Bank of Boston CEO, have before them a titanic task: recovering the soundness of the Brazilian currency (Real) and the trust of investors whose fears slumped the country’s stock exchange as the leftist candidate came closer and closer to the Planalto, government house.

The Real lost a third of its value against the US dollar during the presidential campaign.

However President Lula’s speech and Palloci’s confirmation words managed a first calm reaction from Brazilian markets.

The new Brazilian fisheries department is set to "transform fisheries into one of the focal points" of the government's economic policy, says department head José Fritsch.

Mr. Fritsch, who will become Brazil highest fisheries authority, told La Tribuna he was optimistic about managing the sector with a specific policy and the support of the fisheries sector in all regions. Centralising fisheries management, which was previously controlled by several ministries, will allow for the creating of adequate policies to "increase exports and domestic consumption," said Mr. Fritsch.

Mr. Fritsch first action was to announce the creation of a National Fisheries and Aquaculture Council, which will not only represent the sector, but also environmental interests and the community as a whole.

Tsuneo Okida, leader of São Paulo's State Fishermen Federation, said the creation of a new fisheries department was the most important event for the sector in the last 10 years.

“The National Fisheries and Aquaculture Council should benefit 1,800 coastal fishermen from Baixada Santista region, because one million hectares of fresh water in São Paulo were available for developing aquaculture now that the technology was available”, said Mr. Okida.

Maria Teresa de Oliveira, a researcher and one of the country's leading authorities on the subject, echoed Mr. Okida’s optimism saying that Brazil has the necessary conditions "and competent staff for the sector to progress".

José Fritsch said incoming President Lula found it hard to believe that with 8,000 kilometres of coast “Brazilian fisheries were managed at quiet a low ministerial level". Lifting the profile of fisheries within the government would help to boost output.

Fritsch comes from the southern state of Santa Catarina where 60% of the country's fishery activity is concentrated. Itajaí alone accounts for 530 of the country's fishing vessels, which generate 20,000 jobs. Another important centre is São Paulo, which has 470 kilometres of coasts, abundant rivers and one million hectares of fresh water in dams.

However despite the abundance of resources, Brazil’s average per capita fish consumption is well below the international average, writes La Tribuna. (FIS/MP).-

Although it has one of the largest maritime coasts in the world, on which the economies of dozens of Brazilian cities and towns depend, “fisheries are not producing enough” so the Government plans to introduce a policy for sustainable growth and development, including specific measures for each region.

"Despite the immensity of Brazilian rivers and lakes and of the 200 miles of territorial sea waters, we do not produce the quantity of fish we consume. At present, each Brazilian national eats an average of just seven kilos of fish per year, practically half of what is recommended for a healthy diet," says President elect Luis Ignacio Lula da Silva.

"It is difficult to believe that countries such as Peru and Chile produce more fish than Brazil. It is not because there is not enough fish in our waters; it is because we do not have a real policy to promote the sustainable development of industrial and coastal fisheries." President Lula told local media this policy was vital to help boost local food production and combat hunger and poverty. Investment in the sector could generate employment and improve quality of life.

The first step is to create the National Fishery and Aquaculture Secretariat, which will integrate all Government ministerial offices related to the sector. This agency will develop the National Plan for Sustainable Fisheries and Aquaculture Development to enable medium and long-term sector planning. IBAMA will continue to control fishing activities but will be assigned a budget allowing it to perform its duties correctly.

A Fishery Fleet Renovation Programme will be implemented and a Professional Training Programme for Fishermen will create a workforce specialised in maritime, river, industrial or artisanal fishing, and in aquaculture.

President Lula is promising investment to expand fish landing, storage and trade through Fishing Terminals that will encourage value-added fish production. One of the most important measures in his programme is the creation of specific credit lines in each region to support artisanal fishing and aquaculture. Mr. Lula believes that if the fishery sector can focus on development "it will play a predominant role in generating employment and income as well as helping fight hunger," as well as safeguarding the country's natural resources. (FIS/MP).-

-0-      Chicago Tribune      Brazilians' rejoiced over the inauguration of President Luiz Inacio Lula da Silva on New Year's Day with all the unwarranted optimism of Cubs fans in spring training.      Indeed, there's probably reason to expect the Cubs will have a better 2003 than South America's largest nation. This is a country in desperate need of economic reform and an expansion of its export markets. It's hard to see how that will come from the new president, a leftist who has crusaded against free trade.      And yet hundreds of thousands in Brasilia gave Lula, as the new president is popularly known, a rousing welcome. Polls indicate that nearly 80 percent of the population believes the new government will be "good to excellent."      There is one reason for Brazil to feel good: Lula's inauguration Wednesday marked the first time in 40 years that one civilian president in Brazil has handed power to another peacefully. ...      A Brazilian newspaper called Lula's challenge, to balance populist expectations and fiscally responsible policies, "walking on a knife's edge." The U.S. may be tempted to wait for him to slip off the edge, but the potential economic consequences are too grave. Better to offer a hand and hope that Lula, unlikely as it may be, is open to persuasion.