Full support for Chavez from Lula

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.