Business audience hails Lula speech

news.ft.com By Ed Crooks in Davos and Raymond Colitt in Porto Alegre Published: January 26 2003 21:56 | Last Updated: January 26 2003 22:27

Brazil's president on Sunday won a warm reception from business people and bankers at the World Economic Forum for a speech that mixed praise for free markets and trade with vows to attack poverty and hunger.

Luiz Inácio Lula da Silva's address reflected his need to reassure financial markets spooked by his leftwing reputation, while sticking to his promises to help the 45m Brazilians living below the poverty line.

He repeated his call, made on Friday in a speech to anti-globalisation activists at the "anti-Davos", the World Social Forum in Porto Alegre, Brazil, for a "new world economic order". He described agricultural land reform as "urgent", and said there was a need for "more discipline" in international capital flows. But he promised "an extraordinary effort to expand our trade, especially exports", and said foreign capital should be used to help finance infrastructure spending.

Mr Lula da Silva also proposed a new fund, backed by the Group of Seven rich countries, to tackle poverty in the developing world. It was greeted with scepticism, but demonstrated his ambition to give Brazil a bigger international role. "Brazil is a sleeping giant. We should awaken this giant so we should be respected all round the world," he said. He promised to put his experience as a trade unionist to use in a tough negotiating stance in world trade talks.

In spite of proposing a new economic order to an audience of some of the biggest beneficiaries of the existing one, his address was greeted with thunderous applause and scattered cheering. He was handed a T-shirt showing him as Asterix, the plucky Gaul holding out against the Roman empire.

On Friday, Mr Lula da Silva had defended his visit to Davos to thousands of social activists in Porto Alegre. "Many people in Davos don't like me without knowing me. So I make a point of going there to say the same thing I would tell anyone of you here," he said. His decision to go to Davos had triggered criticism among his more radical leftwing supporters; since its creation the Porto Alegre meeting has been backed by his Workers' party (PT).

Yet Mr Lula da Silva also told the activists that not all problems could be blamed on an inequitable world economic order. "We are poor. Part of the fault may lie with the rich nations. But partially the fault may lie with part of the South American elite," he said.

The president acknowledged the enormous expectations that his government had created not only at home but for Latin America's left and for Socialists around the world. He called on supporters to have patience. "A good coach is not one who begins winning but ends winning a game. I have four years to proceed calmly and cautiously."

This week Mr Lula da Silva will pursue his campaign for hearts and minds, meeting heads of government in Berlin and Paris.

Caio Koch-Weser, Germany's state secretary of finance, said Mr Lula da Silva had "a good message". "The key is that the reform momentum gets the benefit of the enormous credibility that the president brings, but it's a strong team and a strong start," he said. "So far, so good, and the market is already honouring what they have done: [interest rate] spreads are down, and the Real [the currency] is up."