02.01.2003 10.46 am

BRASILIA, Brazil - Former metalworker Luiz Inacio Lula da Silva became Brazil's first working-class president on Wednesday, (Thursday NZT) as tens of thousands celebrated the historic changeover in Latin America's largest country.

At the sleek, modernist Congress in the capital, Brasilia, Lula took the oath of office as the first leftist elected to the presidency. Supporters from across the nation cheered outside as he promised to change the country's course to improve the lot of Brazil's working majority.

He cited his own struggle against poverty as proof that the continent-sized nation had the resources to overcome a long list of problems including escalating crime, a stagnating economy and rising unemployment.

"When I see my own life as an immigrant from the Northeast, a boy who sold peanuts and oranges at the port of Santos... who is now the president, I am convinced we can do much more, and to do so all we need is to believe in ourselves," Lula said. "We are starting a new chapter in Brazil's history."

Before reaching the convertible Rolls Royce that took him to receive the presidential sash from outgoing President Fernando Henrique Cardoso, Lula was mobbed by cheering fans.

It was the first time in 40 years an elected president passed the sash to another elected president.

Some broke through police guards simply to touch their new leader, while one stubborn supporter stopped Lula long enough to snap a picture alongside the gray bearded 57-year-old, who took the oath in a dark suit and striped tie.

With the humble classes that gave him a record-breaking 52 million votes in his fourth attempt at the presidency in mind, Lula organized a party for the people rather than for dignitaries.

Despite rain, festivities kicked off early with country music. More than 150,000 people were expected to converge on the city's central lawn for celebrations.

At the stark, white Planalto presidential palace, Cardoso capped off his second four-year term by handing Lula the sash decorated with the yellow and green of the Brazilian flag.

As Air Force planes swooped in formation over the city, revelers celebrated as they would for Brazil's world-famous soccer victories, driving along the sweeping avenues of the capital, honking horns, and dancing in a sea of green, yellow and deep red, the color of Lula's leftist Workers' Party.

In a country with one of the worst wealth distributions in the world, only surpassed by three African nations, the arrival of a man who never made it past elementary school to the highest office heralded a new beginning for the nation's 170 million people, 53 million of whom live in poverty.

Many of those present spent days on Brazil's bumpy highways, including Lula's 21 relatives from his poor hometown of Caetes, a caravan that drew cheers along the 2400km journey.

Although the New Year's holiday kept some heads of state from attending, most presidents from neighbouring countries were on hand, including Fidel Castro of Cuba and Hugo Chavez of Venezuela, two leftists who have supported Lula in his long quest for the presidency.

The world will watch Lula's management of a nation now seen as a model of democracy in a region troubled by political upheaval, particularly in neighboring Argentina and Venezuela.

• REUTERS

Wednesday January 1, 2003 2:50 PM

CARACAS, Venezuela (AP) - The embattled Venezuelan president - his rule under threat from turmoil in the strikebound oil-producing nation - left the country Wednesday to attend the inauguration of the new Brazilian president.

In what could be a daring move given the upheaval shaking Venezuela, President Hugo Chavez arrived in the Brasilia for the ceremony installing President Luiz Inacio Lula da Silva, whom he considers a friend and ally.

As Chavez arrived at his Brasilia hotel, he told reporters the strike will fail and he wasn't worried about being toppled from power while out of the country.

It's not a strike, it is a conspiracy,'' he said. Venezuelan workers are on the side of the government. ...The country hasn't stopped.''

As the old year turned to new Wednesday, thousands of protesters filled a downtown highway in Caracas to celebrate and demand that Chavez hold a referendum on his embattled presidency.

The demonstrators waved flags, shot off firecrackers and chanted, ``Not one step back,'' in a call to continue a month-long general strike aimed at ousting Chavez from power.

A few miles away, about 1,000 Chavez supporters held their own rally with a loud celebration party outside one of Venezuela's state-run oil company buildings.

The capital awoke to silence Wednesday morning and streets littered with exploded fire crackers and broken beer glass. People stayed home and shops were closed - either for the strike or for the holiday.

The dueling celebrations highlighted the divisions in this South American country, where even family holidays have turned political. New Year's is traditionally a family celebration in Venezuela, the world's fifth-largest oil exporter.

The oil industry, which produces one-third of the gross domestic product and 70 percent of export revenue, has been paralyzed by the strike, which began Dec. 2. Chavez responded by firing dozens of strikers at Petroleos de Venezuela S.A. and importing gasoline and food to counteract shortages.

At the opposition rally, the rhetoric toward Chavez was bitter.

``He is a bandit, an illiterate. He doesn't know how to speak well; he's primitive,'' said Carmen Carrillo, 63, as she watched what the opposition called a Party for Peace.

Strike leaders said Tuesday that if Chavez does not bow to demands for a Feb. 2 referendum on his presidency, they will lead another march on the heavily defended presidential palace.

I say let's go,'' said Carlos Ortega, head of Venezuela's largest labor confederation. And if they are going to kill us, let them kill us once and for all.''

Nineteen people were killed in the opposition's last march on the palace, which prompted a failed two-day coup last April.

Already, protests have erupted at empty service stations. Many Venezuelans predict full-scale riots if Chavez cannot begin delivering gasoline.

Many citizens also are embarrassed that a nation with the largest oil reserves outside the Middle East has been forced to import gasoline from other countries.

At the pro-Chavez rally, the president's supporters listened closely to Chavez' year-end message. The speech, broadcast nationally and presented on a giant screen at the rally, offered little hope for a quick end to the crisis. The president instead braced his country for a tough year to come.

``We must prepare to face difficulties in the first quarter of the year: economic difficulties and difficulties in continuing all the government's plans,'' he said.

``Let's prepare ourselves for the battle, but prepare ourselves with the conviction that 2003 will be a good year. A year of bounty, progress, prosperity, and the consolidation of peace, to leave behind the winds of war that still blow.''

The Chavistas, as the president's supporters are called, danced under Christmas lights as a 13-piece band played ``gaitas,'' traditional holiday music, while fireworks lit the sky.

Chavez is the president of the poor and we trust he'll make our lives better. That's why we're going to continue by his side in 2003,'' said 69-year-old Lourdes Cardenas. United, we'll overcome adversity.''

01 Jan 2003 20:33

(Updates throughout)

WASHINGTON, Jan 1 (Reuters) - The first day of the new year saw ongoing preparations for a possible war against Iraq, historic political change in Latin America's biggest country and new airline security measures to guard against terror attacks.

Against the backdrop of continuing economic uncertainty, people worldwide welcomed 2003 at scores of celebrations, where tight security prevented serious incidents.

U.S. air authorities marked the new year by screening all checked luggage for explosives in answer to the Sept. 11, 2001, attacks on the United States. Before the hijacked airliner attacks, just 5 percent of the bags were checked.

In New York, up to 1 million people had a night of celebration under tight security, watching the traditional crystal ball drop in Times Square.

As in other cities across the globe, thousands of extra police were on duty. The Coast Guard closed New York harbor to private boats in response to a threat of attack that never materialized.

In London and Paris, tens of thousands celebrated and extra police patrolled after recent arrests of suspects on terror charges. Cars were banned around Paris' famed Champs Elysees.

Violence and accidents claimed some lives, with a grenade attack killing nine and wounding more than 30 in the Philippines and a fireworks explosion in Mexico killing at least 37 and injuring dozens more in the port city of Veracruz.

PROSPECT OF WAR

The U.S. military proceeded with a buildup in the Gulf, moving into position for a possible war with Iraq with the deployment to commence of a full Army combat division, the first to the region since the 1991 Gulf War.

More than 11,000 desert-trained troops were soon to begin heading to the region, where U.S. President George W. Bush has threatened Iraq with attack if President Saddam Hussein does not disarm.

In Baghdad, U.N. weapons inspectors took no break for the holiday, as they searched for evidence of chemical, biological or nuclear weapons programs.

With tensions worsening between the United States and North Korea as well, Pyongyang issued a New Year's message calling on its people to build "a powerful nation" under its "army-based policy." North Korea has started reactivating a complex capable of producing weapons-grade plutonium and has expelled U.N. inspectors monitoring it.

In Vatican City, Pope John Paul II appealed for peace on all fronts in his first message of 2003.

"In the face of today's conflicts and the menacing tensions of the moment, yet again I invited prayer to pursue pacific means for settlement," he said during his homily to celebrate the Roman Catholic Church's World Day of Peace.

POLITICAL CHANGE

In Brazil, throngs were celebrating the start of a new political era as former metalworker Luiz Inacio Lula da Silva was sworn in as the first working-class, elected leftist president of Latin America's largest country.

In Venezuela, a 31-day general strike that has choked the country's lifeblood oil business dragged on with a large New Year's street party that organizers said was a show of determination to oust populist President Hugo Chavez.

In the United States, Americans began the year facing the prospects of continuing economic uncertainty, with concern about the consequences of potential war with Iraq casting a pall over 2003 prospects much as the aftershock of the Sept. 11, 2001, terror attacks did last year.

Bad weather also delayed Philadelphia's annual "Mummers Parade," with organizers fearful rain and wind would damage the Mummers' famed fancy costumes and fanciful displays.

SUSANNAH A. NESMITH, Associated Press Writer Wednesday, January 1, 2003

(01-01) 11:17 PST (AP) --

CARACAS, Venezuela -- President Hugo Chavez left his strikebound and politically riven country Wednesday to attend the presidential inauguration in Brazil, and again refused to bow to opposition leaders who have crippled Venzuela in a month of massive protests.

"It's not a strike, it is a conspiracy," Chavez said after arriving in Brasilia for Luiz Inacio Lula da Silva's swearing in. "Venezuelan workers are on the side of the government. ...The country hasn't stopped."

It wasn't immediately known when Chavez would return, though he was not expected to stay abroad for more than a day. He and Silva planned to have breakfast together Thursday morning. The strike, which began Dec. 2, has paralyzed Venezuela's all-important oil industry and caused gas lines and food shortages.

Venezuela is the world's fifth-largest oil exporter, and the crisis has helped push international oil prices above $30 per barrel.

Opponents blame Chavez's leftist policies for a severe economic recession and accuse him of trying to accumulate too much power. Chavez says he is ridding the country of a corrupt political system that has disenfranchised the poor.

In his New Year's Eve address, Chavez said the country would face more difficulties in the coming months. On Wednesday, he said he didn't know how long the strike would last but said it was "destined to fail."

"I don't think it's a matter of time," Chavez said. "Whether it's a week, one month, six months, the important thing is that they are destined to fail because we are in the right and have the support of the majority of the country."

Since the strike began, Venezuela has been forced to import gasoline and food. Brazil has shipped 525,000 barrels of gasoline, and Trinidad and Tobago said 300,000 barrels would arrive Wednesday.

Chavez has also fired dozens of striking workers at the state-run oil company, Petroleos de Venezuela S.A. The oil industry produces one-third of the country's gross domestic product and 70 percent of its export revenue.

Thousands of people gathered in downtown Caracas on New Year's Eve at political rallies -- one to demand Chavez's ouster, another to show support for the beleaguered president. On Wednesday morning, the city was quiet as workers swept up the refuse of the previous evening.

Opposition leaders said they had nothing planned for Wednesday, but Chavez's trip to Brazil was daring given the upheaval shaking Venezuela. He already survived one brief coup in April.

Strike leaders said Tuesday that if Chavez does not bow to demands for a nonbinding referendum on his presidency on Feb. 2, they will lead a march on the heavily defended presidential palace.

A similar march in April left 19 dead and prompted the failed coup.

Chavez says Venezuela's constitution only allows a binding referendum in August 2003, or halfway into his six-year term.

Negotiations between the government and the opposition were to resume Thursday.

Also Wednesday, lawyers for dissident National Guard Gen. Carlos Alfonso Martinez complained their client was being kept under house arrest, violating a court order granting him complete freedom.

Ten people were injured when Martinez -- one of dozens of military officers who have occupied a Caracas square for three months in rebellion against Chavez -- was arrested Monday.

22:21 2003-01-01

As President Lula da Silva of Brazil was sworn in today in Brasilia, Brazil breathed a collective sigh of relief that the decades of inept rule which characterised the right and centre-right administrations since democracy was restored 20 years ago, are over. Finally, the Presidential palace has an occupant who has the interests of the people of Brazil as his primary objective.

Lula had worked hard behind the scenes to put together a team of ministers which represented a wide political spectrum, avoiding the temptation to bow to the party machine and place only those involved with his party, the Partido dos Trabalhadores (Labour).

In his 45-minute taking of office speech, President Lula said that “Today, Brazil re-encounters itself”, meaning that during his presidency, the Brazilian people will analyse their strengths and weaknesses and will work hard to achieve much improved social indicators by 2010, if not by 2006, the end of his first term in office.

“Hope has finally beaten fear. The people have decided that the time had arrived to tread new paths”, he declared adding that the previous model of government, which saw Brazil’s unemployment rate soar to around 20% of the working population in some areas and 20% of the country’s 180 million inhabitants living below the poverty line on less than one USD/day, was exhausted.

President Lula claimed the eradication of hunger, a fairer distribution of land and a democratisation of the country as his main social objectives in the short term, while claiming that the creation of jobs is his “obsession”. He added that his government will combat corruption implacably, finishing with the culture of impunity which shrouds the political class. His external policy will be centred, firstly, around the promotion of a stronger MERCOSUL.

President Lula speaks of a national project: “Brazil is a huge country. We cannot allow ourselves to float, borne by the winds, lacking a project. We must cultivate patience and perseverance”. It is here that the crux of the matter lies. How much help President Lula’s project will receive from the USA and the international financial community, to whom Brazil owes some 235 billion USD and must meet repayment schedules of 1 bn. USD per week in 2003, remains to be seen.

The eyes of the energy lobby which rules Washington’s external policy are for the time being firmly fixed on Venezuela’s national oil company, which has a monopoly on oil exploration and production. How much longer will it be before this lobby turns its attention to Petrobras?

Marcia MIRANDA PRAVDA.Ru BRAZIL