The Miami Herald, Posted on Sat, Jun. 21, 2003 By NANCY SAN MARTIN nsanmartin@herald.com

WASHINGTON - Exchanging handshakes and smiles with Brazilian President Luiz Inácio Lula da Silva, President Bush sent a clear message Friday that he is prepared to set aside ideological differences in favor of a firm and profitable relationship with Latin America's largest country.

''Brazil is an incredibly important part of a peaceful and prosperous North and South America,'' Bush said as he welcomed da Silva to the White House. ``This relationship is a vital and important and growing relationship.''

Da Silva also touted the importance of a solid partnership, but stressed that it ''should be on the basis of sincerity'' and not ``just build up a spectacle for the press and for the public.''

''I believe that Brazil is and can continue to be a good partner of the United States,'' da Silva said. ``Without any question, I believe that we can surprise the world in terms of the relationship.''

The gathering was more than just a cordial exchange between two leaders. It involved high-ranking Cabinet members from both governments, and by the end of the day they had committed to a series of joint initiatives, ranging from agriculture to energy to health programs for combating AIDS in Portuguese-speaking parts of Africa.

HIGH POINT

''The high point of the meeting was when we discussed the need for guaranteeing peace in the world,'' da Silva said at a news conference later in the day.

``To guarantee peace, you have to think of the development of the poorest regions . . . We must make up for wasted time in South America.''

Bush, who has met with da Silva three times over the past six months, personally complimented a man who rose from poverty to trade union activist to leader of a country with the world's ninth-largest economy.

''I'm very impressed by the vision of the president of Brazil,'' Bush said of da Silva, who took office Jan. 1. ``He's a man who clearly has deep concerns for all the people of Brazil. He not only has a tremendous heart, but he's got the abilities to work closely with his government and the people of Brazil to encourage prosperity and to end hunger.''

With a population of about 180 million -- the Western Hemisphere's second most populous country after the United States -- Brazil has the largest economy in South America. Trade between the United States and Brazil is impressive, totaling $26 billion last year.

REGIONAL CONCERNS

Beyond bilateral interests, such as the Free Trade Agreement of the Americas that Washington is pushing for implementation by 2005, the two leaders also discussed regional concerns. Among them: crime, drug trafficking and continuing instability in Colombia and Venezuela.

Both stressed the importance of supporting an end to the civil war in Colombia and of a referendum to resolve the political crisis surrounding Venezuelan President Hugo Chávez.

BBC News

Lula has impressed Washington since taking office

US President George W Bush and his Brazilian counterpart have emphasised their countries' common interests despite opposing each other over Iraq and some trade matters.

Luiz Inacio Lula da Silva - commonly known as Lula - was visiting the White House, the first foreign leader who opposed the US-led war on Iraq to do so.

Mr Bush said the relationship between the countries is "vital, important and growing".

The two men announced a series of joint projects ranging from energy to business development in Brazil and fighting Aids in Africa.

"Brazil is an incredibly important part of a peaceful and prosperous North and South America," Mr Bush said as he received Lula for an Oval Office meeting.

The BBC's Steve Kingstone, in Washington, says the left-wing former trade union leader is not a natural political ally of Mr Bush.

He has maintained warm relations with Cuba's Fidel Castro, long a thorn in America's side.

But since taking office, Lula has impressed Washington with a combination of economic discipline and an ambitious long-term programme to combat poverty in Brazil, our correspondent says.

On a personal prospective I am very impressed by the vision of the President of Brazil -George W Bush

Mr Bush said: "This relationship is a vital and important and growing relationship.

"On a personal prospective I am very impressed by the vision of the President of Brazil. He not only has a tremendous heart, but he has got the abilities to encourage prosperity and to end hunger."

For his part, Lula spoke of a great partnership but it should, he said, be based on sincerity and trust going beyond a few occasional photo opportunities.

Confrontations

The dynamic between the two men is probably the key to this relationship for the next few years, our correspondent says.

Lula's domestic reforms have provoked trade union protests

Together the two governments are chairing negotiations towards a hemisphere-wide free trade agreement scheduled to come into force in 2005.

The United States is the largest investor in Brazil, with 400 firms and investments of $30bn (£20bn), while Brazil exports some $15bn (£10bn) worth of goods to the US.

With a population approaching 175 million, Brazil is the second largest country in the Americas, after the US - and South America's largest economy.

Lula would like to ensure greater access for Brazil's huge agricultural sector to US markets before agreeing to any trade deals.

Meanwhile, American policymakers are increasingly looking to Brazil for help in resolving some of the most difficult issues between the hemispheres.

These include the confrontation between US companies and Venezuela's Hugo Chavez, and the drug-trafficking issues in the Andes states.

The Brazilian president is accompanied by no fewer than 10 cabinet ministers, in the biggest Brazil-US summit since World War II when President Frank D Roosevelt persuaded Brazil to join the war effort.

Fri June 20, 2003 01:19 PM ET By Randall Mikkelsen

WASHINGTON, June 20 (<a href=reuters.com>Reuters) - U.S. President George W. Bush and Brazilian President Luiz Inacio Lula da Silva were expected to focus in meetings Friday on trade, regional hot spots and Lula's ambitions to help the poor.

One surprise has been warming relations between the Brazilian president, a former labor leader, and Bush, a conservative former businessman. Brazil has recently clashed with the United States over trade and the war in Iraq.

But the two countries were expected to announce joint initiatives including U.S. support for Lula's anti-hunger program in Brazil, cooperation on energy and poverty relief measures for Africa.

"Today the people of both our countries will see a series of initiatives on a variety of fronts, which indicate that this relationship is a mature relationship and an important relationship," Bush said as he welcomed Lula.

The two leaders took no questions in what was their third meeting.

"This is a novelty, it's not just a summit meeting with two presidents but it's a meeting that has Cabinet members of both governments. So that from this meeting onwards, our ministers can continue to work together independently of the two presidents," Lula said.

"Without any question, I believe that we can surprise the world in terms of the relationship between Brazil and the United States," he said.

Lula brought 10 ministers with him. For the United States, Agriculture Secretary Ann Veneman, Special Trade Representative Robert Zoellick, and Energy Secretary Spencer Abraham were expected to take part in the expanded meeting, a U.S. official said.

Brazil and the United States have clashed over trade in the past, particularly subsidies and tariff barriers slapped on key Brazilian exports like orange juice, textiles and steel.

Lula strongly opposed the Iraq invasion. In their public remarks, Iraq was not mentioned.

Brazil and the United States also co-chair the Free Trade Area of the Americas talks to create a hemisphere-wide free trade zone by January 2005. The FTAA is central to Bush's policy of promoting trade and democracy in Latin America.

Most of the region suffered a recession in 2002, with Venezuela and Argentina hard hit by sharp recessions and bouts of political upheaval.

By Steve Schifferes BBC News Online, Washington

Brazilian President Luiz Inacio Lula da Silva is calling on President George W Bush in Washington at a time when US-Latin American relations are at a low ebb.

Lula has already stepped onto the international stage

During the Iraq crisis, the failure of usually reliable allies like Mexico and Chile to support the case for war deeply dented relations between the US and the nations south of its border.

Now, the leader of Latin America's largest economy, Brazil, has come to Washington to repair the damage.

Although Lula was also an opponent of the Iraq war, Brazil holds the key to the Latin American relationship, and President Lula is relishing his role as a bridge between other nations and the giant in the North.

It represents the best opporutnity in many months to get hemispheric relations back on track former Clinton chief of staff Mack McLarty

His agreement is also crucial for the United States if it wants to proceed with ambitious plans to create a Free Trade Area of the Americas by 2005, linking economies from Alaska to Argentina in a single economic zone.

The Brazilian president will be accompanied by no fewer than 10 cabinet ministers, in the biggest Brazil-US summit since World War II when President Frank D Roosevelt persuaded Brazil to join the war effort.

It could mark a new phase in the relations between the Western hemisphere's two biggest powers.

"Brazil represents the biggest regional opportunity for the US, but also the biggest challenge," writes former Clinton chief of staff Mack McLarty in the Washington Times.

"(The meeting) represents the best opporutnity in many months to get hemispheric relations back on track."

'Anchor of stability'

Lula, who began life as a firebrand trade union leader, has matured into a highly respected manager of the Brazilian economy who has won plaudits from the International Monetary Fund and the World Bank.

Lula's domestic reforms have provoked trade union protests

He has stabilised the currency and promised to tackle Brazil's large public sector deficit while targeting spending on the reduction of poverty and hunger.

"There is a recognition of mutual interest on the part of the US in Brazil's success. Brazil can be a very large anchor of stability," said former US ambassador to Brazil Anthony Harrington.

IMF managing director Horst Koehler says that Lula is doing an outstanding job in managing the economy and he is "deeply impressed."

The United States is the largest investor in Brazil, with 400 companies and investments of $30bn (£20bn), and Brazil exports some $15bn (£10bn) worth of goods to the US.

But Lula would like to ensure greater access for Brazil's huge agricultural sector to US markets before agreeing to any trade deals.

And Brazil would like to strengthen Latin America's own regional trade pacts, like Mercosur (which binds Argentina, Brazil, Paraguay and Uruguay), before proceeding to a pan-regional deal.

Meanwhile, the US is pressing ahead with bilateral deals, and recently concluded a free trade pact with Chile.

Brazil's ambitions

Under Lula, Brazil is trying to assert what it believes is its rightful place as the economic and political leader of Latin America after years of economic crisis and political turmoil.

He told the Brazilian Congress he was carrying out reforms to "transform our nation into a developed country that conquers the place it should have already occupied in this globalised world".

And, speaking at this week's Mercosur summit, he promised to work every minute to consolidate the dream of Latin American unity.

Lula is hoping that, by presenting a common front, Latin American countries can win concessions on trade from the US.

Meanwhile, American policymakers are increasingly looking to Brazil for help in resolving some of the most difficult hemispheric issues - including the confrontation between US companies and Venezuela's Hugo Chavez, and the drug-trafficking issues in the Andes states.

Brazil and the US "have built strong, open relationships in the last few years," says Brazil's ambassador to the US Ruben Barbosa.

Despite their ideological differences, George Bush and Lula are both strong leaders with a down-at-home philosophy and a penchant for getting things done.

Now the challenge is to see whether Brazil can become the vehicle to rehabilitate the strained relationship between the US and Latin America.

The Miami Herald, Posted on Thu, Jun. 19, 2003 BY KEVIN G. HALL khall@krwashington.com

RIO DE JANEIRO, Brazil - Brazil's central bank slightly lowered its overnight basic lending rate Wednesday for the first time in 11 months and the first time since President Luiz Inacio Lula da Silva took office Jan. 1.

In a sign that the Brazilian government is regaining investors' confidence, the bank's monetary policy committee reduced the interest rate, called the Selic, by half a percentage point, to 26 percent.

Brazil's overnight lending rate remains the third-highest in the world, trailing only Turkey and Venezuela.

Brazil had raised interest rates five times since October, the month Lula was elected, the final time in February under his presidency.

The higher rates were aimed at inducing foreign investors to keep their money in Brazil despite fears that Lula, a critic of U.S.-backed economic policies, would abandon the free-market reforms his predecessor had adopted.

Wednesday's action is unlikely to quiet what has become the first major controversy of Lula's government. An avowed leftist, Lula spooked financial markets after his victory. Since taking office, he has been ultra-orthodox in managing the economy.

Economic analysts in Brazil think interest rates should fall further, given that the currency has been stable for months against the dollar.

''It is very clear there was enough space to cut up to 2 points on interest rates,'' said Daniel Tha, an analyst with economic consultant Global Invest in Curitiba.

High interest rates are slowing South America's largest economy, which isn't expected to grow by more than 2 percent this year.

Lula took office promising a ``confidence shock.''

But Tha and other analysts complain that the high interest rates stifle consumer spending and hurt the stock market, because investors won't gamble on stocks if they can earn 26 percent on government bonds and other debt instruments.

''They are forgetting to look at the real economy, where people are hurting,'' Tha said.

In a speech Tuesday, Lula asked Brazilians to be patient about the economy and his promise of new jobs.

''We have spent six months fixing the house, conquering the confidence [of investors] that was needed,'' he said.

Inflation in May was at a 17.2 percent annual rate, the highest since 1996. The central bank predicts 7.76 percent inflation over the next 12 months.

Earlier this month, Brazil sold international investors $1.25 billion in 10-year bonds. The government said it was a clear sign that Wall Street saw healthy long-term prospects for Brazil.