So far so good for Da Silva's honeymoon

www.miami.com By Andres Oppenheimer Posted on Thu, Feb. 20, 2003

SAO PAULO - Six weeks after taking office, Brazil's leftist president Luiz Inácio Lula da Silva is doing better than many had anticipated: His popularity rating is higher than ever, the media treat him like a rock star, and many people here see him as an upcoming regional leader.

But will Brazil's political euphoria last? Or will South America's most powerful country soon lapse into a crisis of unfulfilled expectations?

Judging from what I heard here, da Silva's honeymoon will last longer than the usual 100 days. But there are several factors -- including a possible U.S. war against Iraq, and growing unemployment rates -- that may soon take some of the glitz away from Latin America's first elected leftist government in decades.

First, let me give you the facts. The percentage of Brazilians who believe da Silva is doing a good job has risen to a whopping 84 percent, higher than that of any recent Brazilian president, according to separate surveys by the Vox Populi and CNT-Sensus polling firms. By comparison, da Silva was elected with 61 percent of the vote.

So far, da Silva has successfully allayed fears that he would scare off investors with his radical rhetoric of the not-so-distant past. A lifelong socialist who founded the Workers Party 22 years ago, da Silva until recently called for severing ties with international financial institutions, and not paying Brazil's foreign debts.

Perhaps seeing what has happened in neighboring Venezuela, where President Hugo Chávez's incendiary speeches against the ''oligarchy'' have triggered massive capital flight and created 2.5 million new poor, da Silva is following pretty orthodox economic policies. At the same time, he has launched a nationwide campaign to eliminate hunger, and says he is pursuing a more independent and assertive foreign policy.

''He has done very well,'' U.S. Ambassador Donna Hrinak told me in an interview, reflecting the view of most foreign diplomats in Brazil.

EFFECTS OF A WAR

On the downside, a war against Iraq could hurt Brazil, economically and politically.

Brazil still imports 15 percent of its oil, meaning that a rise in oil prices could complicate the country's efforts to

meet its foreign debt payments. In addition, a war-linked world recession would affect Brazil's exports, and further dry up foreign loans and investments. In times of uncertainty, lenders tend to stay away from emerging markets.

Politically, there is a danger of a rift with the Bush administration over a possible war with Iraq. Despite a successful first meeting in Washington with President Bush last year, da Silva -- who is as prone to shoot from the hip as his U.S. counterpart -- has already angered U.S. officials by stating that Bush is ''obsessed'' with Iraq.

On the domestic front, da Silva is facing growing opposition from the radical wing of his party. Still, he seems to be gaining more support in Congress from centrist parties than he may lose in the event of a break with the Workers Party's ultra-leftist wing.

''The fight with the radicals is excellent for Lula,'' said Fatima P. Jordao, a sociologist and consultant to several polling firms. ``It places him at the center of the political spectrum.''

POSSIBLE BACKLASH

Da Silva's biggest problem may be a possible backlash from unfulfilled expectations. While 78 percent of Brazilians expect unemployment to drop, according to the Vox Populi poll, economists say unemployment levels may actually rise. Many jobless people who had given up hope are now starting to seek work, buoyed by the country's upbeat mood. That would drive up Brazil's 12 percent unemployment rate because, like many other countries, Brazil measures its unemployment rate by the number of people who seek work.

Ambassador Hrinak is optimistic that da Silva will do well. The success or failure of the da Silva presidency will have major repercussions in all of Latin America, she says.

''If he can combine sound economic management, with effective attention to social programs, this sends a powerful message to the hemisphere,'' she said. ``And if he can't do it, then what does it say to other progressive parties about waiting 22 years to come to power? Will they actually do that?''

I agree. One of the best things that could happen to Latin America would be if other leftist parties emulated da Silva's model, and gave up violence and totalitarian utopias. Conversely, one of the worst scenarios would be if da Silva fails, and groups such as Colombia's leftist guerrillas or the radical coca growers in Bolivia use Brazil's example to argue that fighting for social justice in the political arena is a waste of time.

So let's hope that da Silva continues on his present course. I'm not terribly optimistic that he will manage to maintain his current popularity, but I'm convinced that it's in everybody's interest that he does.