www.globeandmail.com Friday, January 31 Associated Press

Brasilia — Brazil's new president launched his anti-hunger program Thursday with a move to provide $14 (U.S.) a month to 1.5 million families, most from the country's poverty-stricken northeast.

While the stipend may seem insignificant, President Luiz Inacio Lula da Silva's hunger task force estimated 46 million of the country's 175 million citizens survive on less than $1 a day.

"The struggle against hunger is a fundamental step toward overcoming misery, poverty, a lack of opportunities and social inequality," said Mr. da Silva, who dropped out of grade school to help support his family.

He made hunger eradication his top priority during his Jan. 1 inauguration speech.

"We are going to create the conditions so that everyone in our country can eat a decent meal three times a day, every day, without needing donations from anyone," he said.

But Mr. da Silva, Brazil's first elected leftist president, cautioned that there were no quick fixes to eliminate hunger in Brazil, which has the world's fifth-largest population.

"Hunger cannot be vanquished from one day to another, or with some isolated government measures," he said. "Conquering hunger will demand a lot of effort, a lot of persistence, a lot of courage and dedication from all of us during the next four years."

Brazil will spend $514-million this year on its food program, and the first payments start next week when 1,000 poor families in the arid northeastern state of Piaui receive their $14. All the 1.5 million families will be enrolled by the end of the year.

Eligible families living in towns and cities will get a kind of debit card to draw funds from a state-owned bank, while coupons similar to food stamps will be used in remote regions without banks.

Families can buy almost anything except tobacco, alcohol or soft drinks and must produce some kind of proof of purchase, said Jose Graziano, the federal secretary of food security.

Theologian Frei Betto, a member of the hunger task force, said children in poor communities would be trained to visit local families and teach them about nutrition — an idea modeled after Brazil's highly successful Health Agents program.

Still, the launch of the program has been burdened with controversy.

Inexplicably, Maranhao — which borders Piaui — was left off the initial list of participating states. And Maranhao ranks second worst of Brazil's 26 states on a human development index that measures income, illiteracy, life expectancy and school enrollment.

It is also the home state of former Brazilian president Jose Sarney, who backed Mr. da Silva during his presidential campaign. Andre Singer, a spokesman for the President, would say only that Maranhao would be discussed at a press conference scheduled for Thursday evening.

The government also says it will maintain anti-hunger programs developed by Mr. da Silva's predecessor, Fernando Henrique Cardoso, including a project that gives families up to $13 per month for food as long as their children stay in school.

Another program gives up to $13 a month to poor families with pregnant women or breast-feeding mothers.

Earlier this week, Brazilian supermodel Gisele Bundchen opened Sao Paulo Fashion Week in Brazil's largest city by donating $29,000 to Mr. da Silva's anti-hunger effort.

The program has also received a little over 3 tonnes of donated food — including milk, soybean oil, rice, beans, wheat, flour and corn, said Luiz Roberto Baggio, a program co-ordinator. Guidelines are not in place yet for how to distribute those goods.

After he was inaugurated, Mr. da Silva delayed putting in place a plan to spend $400-million on new jet fighters to upgrade Brazil's antiquated air force planes. His aides said anti-poverty programs were more important.

www.upi.com By Bradley Brooks UPI Business Correspondent From the Business & Economics Desk Published 1/30/2003 6:42 PM

RIO DE JANEIRO, Brazil, Jan. 30 (UPI) -- Brazil's new leader cut his political teeth as a union negotiator facing up to this country's military dictatorship in the late 1970s. Now, he is trying to use the tactics he learned there in trade talks with developed nations.

As he takes the reins of national power, President Luiz Inacio Lula da Silva is beginning to show some of that negotiating acumen -- namely in his attempts to play the European Union off the United States when it comes to a free trade deal.

During a trip to the World Economic Forum and subsequent travels around Europe earlier this week, Lula railed against the agricultural protectionism of the United States while also giving winks to EU leaders that a deal with the Mercosur trade bloc could be in the works.

Securing a deal with Mercosur -- the trade bloc made up of Brazil, Argentina, Uruguay and Paraguay -- before the United States is able to push through its Free Trade Area of the Americas pact, or FTAA, would be a coup for Europe.

Yet according to some analysts, such a scenario might not be all that unhealthy for the FTAA, either.

"My own view is that if the EU reaches a deal with Mercosur before we conclude the FTAA, that it would in fact stimulate the FTAA, at least on the part of the United States," said Sidney Weintraub, director of the Americas program at the Center for Strategic and International Studies in Washington.

"A lot of the congressional opposition that builds up with these things would dissipate if they saw the U.S. exporters being discriminated against in the Mercosur market."

Pascal Lamy, the EU's top trade official, landed in Brazil on Wednesday.

He was holding talks with the country's top business leaders Thursday, explaining why signing a deal with the EU prior to closing the FTAA is a good thing. On Friday, he meets with Lula.

Analysts expect some loud statements coming from the meeting, pronouncements sure to be directed toward Washington as Lula positions Brazil -- and Latin America as a whole -- heading in to talks on the FTAA.

The Bush administration is hoping to conclude the FTAA by 2005. The agreement would create a free-trade zone from Alaska to the tip of South America and include 34 countries, 800 million people and some $3.4 trillion in trade.

"We don't think it's possible to accept the protectionist measures that were approved by the American Congress, to even begin talking about the implementation of the FTAA," Lula said at a joint news conference with French President Jacques Chirac in Paris earlier this week.

Chirac joined the fray, touching on the most sensitive issue when it comes to trade in Latin America. Chirac said the idea that Europe gives more subsidies to its farmers than the United States "is more propaganda than reality."

Weintraub -- and most economists -- see it differently.

"That's nonsense," Weintraub said, referring to Chirac's statement. "That's not true. The only thing you might argue is that the EU perhaps tries to make its subsidies to be less objectionable in the sense that they don't encourage more production."

For his part, Lamy is aggressively touting the EU's trade plan with Mercosur during his trip in Brazil, saying it is more ambitious than "a simple free trade agreement."

Lamy is telling any Brazilian official who will listen that the country must take the lead in pushing an EU-Mercosur trade agreement.

He is also highlighting that the EU's ideas on trade deals include advancements in the social sector, right in line with Lula's priorities.

"A government inspired by solidarity -- like (Brazil's) current one -- could win since the agreement would increase economic cooperation, along with education and health programs," Lamy said.

But Weintraub thinks that the EU has a tough row to hoe in swaying Mercosur -- namely because of its own agricultural protectionism.

"I've always thought that reaching an agreement with Mercosur was going to be hard for the EU, because it's difficult for me to see what they are going to offer Argentina, let alone Brazil (in the agricultural sector)," he said.

Analysts say the big hurdle for both the United States and the EU in quickly clinching a trade deal with Latin America is that neither wants to negotiate agricultural issues only with the region.

"The biggest problem (the FTAA) faces is the desire of the United States to do the agriculture negotiations in the World Trade Organization, so that if it gives up its subsidies, it can get the Europeans to do the same," Weintraub said.

Lula and Brazil's negotiators -- long the most vocal opponents of agricultural subsidies in the developing world -- are certainly aware of this.

But they have little choice, analysts say, but to use the negotiating tactics at their disposal, however impotent they may be.

Yet, looking at history, Lula was able in the late 1970s to bring about the first wave of industrial strikes in Brazil, the first real blow against an iron-fisted dictatorship.

Despite having significant odds stacked against him, those who know Lula's history wouldn't be surprised if he is somehow able to squeeze water from the proverbial stones of trade negotiations with the EU and the United States.

 www.fox29.com

BRASILIA, Brazil (AP) _ Brazil's new president launched his anti-hunger program Thursday with a move to provide $14 a month to 1.5 million families, most from the country's poverty-stricken northeast.

While the stipend may seem insignificant, President Luiz Inacio Lula da Silva's hunger task force estimated 46 million of the country's 175 million citizens survive on less than $1 a day.

"The struggle against hunger is a fundamental step toward overcoming misery, poverty, a lack of opportunities and social inequality," said Silva, who as a boy dropped out of grade school to help support his family.

He made hunger eradication his top priority during his Jan. 1 inauguration speech.

"We are going to create the conditions so that everyone in our country can eat a decent meal three times a day, every day, without needing donations from anyone," he said.

But Silva, Brazil's first elected leftist president, cautioned that there were no quick fixes to eliminate hunger in Brazil, which has the world's fifth-largest population.

"Hunger cannot be vanquished from one day to another, or with some isolated government measures," he said. "Conquering hunger will demand a lot of effort, a lot of persistence, a lot of courage and dedication from all of us during the next four years."

Brazil will spend $514 million this year on its food program, and the first payments start next week when 1,000 poor families in the arid northeastern state of Piaui receive their $14. All the 1.5 million families will be enrolled by the end of the year.

Eligible families living in towns and cities will get a kind of debit card to draw funds from a state-owned bank, while coupons similar to food stamps will be used in remote regions without banks.

Still, the launch of the program has been burdened with controversy.

Inexplicably, Maranhao _ which borders Piaui _ was left off the initial list of participating states. And Maranhao ranks second worst of Brazil's 26 states on a human development index that measures income, illiteracy, life expectancy and school enrollment.

It is also the home state of former Brazilian president Jose Sarney, who backed Silva during his presidential campaign. Silva spokesman Andre Singer would say only that Maranhao would be discussed at a press conference scheduled for Thursday evening.

The government also says it will maintain anti-hunger programs developed by Silva's predecessor, Fernando Henrique Cardoso, including a project that gives families up to $13 per month for food as long as their children stay in school.

Another program gives up to $13 a month to poor families with pregnant women or breast-feeding mothers.

Earlier this week, Brazilian supermodel Gisele Bundchen opened Sao Paulo Fashion Week in Brazil's largest city by donating $29,000 to Silva's anti-hunger effort.

Silva's program has also received a little over 3 tons of donated food _ including milk, soybean oil, rice, beans, wheat, flour and corn, said Luiz Roberto Baggio, a program coordinator. Guidelines are not in place yet for how to distribute those goods.

After he was inaugurated, Silva delayed putting in place a plan to spend $400 million on new jet fighters to upgrade Brazil's antiquated air force planes. His aides said anti-poverty programs were more important.

washingtontimes.com By Carmen Gentile UPI Latin America Correspondent

     SAO PAULO, Brazil, Jan. 30 (UPI) -- Brazil Thursday officially launched its aggressive hunger-eradication program, which will attempt to feed 10 million Brazilians in the next few years. Top Stories

     The program -- dubbed "Zero Fome" (Zero Hunger) -- is months in the making and has been President Luiz Inacio Lula da Silva's No. 1 priority since he assumed office Jan 1.

     Brazil's new, leftist president -- the nation's first in almost 40 years -- campaigned on a platform that called for widespread social reform in Brazil, where the economic divide between the wealthy and poor is one of the largest in the world.

     A former metalworker and union leader, Lula, as he is known, himself grew up in a Sao Paulo "favela," or slum, and quit school as a young boy to work and help his family make ends meet.

     At Zero Fome's outset, Brazilians deemed poor enough to qualify for program benefits -- those earning about a dollar or less a day -- will receive a magnetic card that will enable them to withdraw funds to purchase food at select stores and distribution centers.

     "We need to defeat hunger, poverty and social exclusion," said Lula Thursday from the capital, Brasilia. "Our war is not going to kill anyone ... it will save lives."

     The effort won't be easy, however, considering the dismal poverty statistics and budget constraints Lula faces in 2003, as there is little room to allocate additional funding for the program. According to government statistics, an estimated 45 million out of 175 million Brazilians are malnourished.

     In an effort to supplement Zero Fome's financial needs, Inter-American Development Bank President Enrique Iglesias said earlier this month that the IDB would allocate $12 billion to fund this and other projects.

     The United States has also pledged between $6 billion to $10 billion over the next three years. Several members of the European Parliament also pledged their support Thursday for Lula's initiative and called for the European Union to create a fund for combating hunger and misery in developing nations.

     Lula recently returned from a week in Europe where he met with German and French leaders and attended the World Economic Forum in Davos, Switzerland.

     Though the meetings were dominated by talk of a possible confrontation with Iraq, the Brazilian leaders used the opportunity to plug Zero Fome and called on industrialized nations to make the battle against hunger the world's top priority.

     While lauded by many, Lula's plan for eradicating hunger has come under some fire for being too reactionary to the poverty situation and for indulging in the type of populist ideals that prompted the military to seize power in 1964.

     Others have condemned the program mentioning the possibility of corruption when determining who receives assistance and the possible birth of a black market for federal food cards.

     Lula answered some of his critics Thursday saying that the program is not just about feeding Brazil's hungry but part of a larger effort to improve the lives of impoverished segments of society.

     "These emergency donations are necessary, but everybody knows that they will not put an end to the problem," he said. " It is necessary to give someone fish and then teach him how to fish."

www.forbes.com Reuters, 01.30.03, 4:21 PM ET

NEW YORK, Jan 30 (Reuters) - Investment bank Morgan Stanley said on Thursday it raised its recommendation on Brazilian sovereign bonds to outperform from market perform amid optimism for the legislative agenda of the country's new government.

Morgan Stanley said in a report it advised clients to move their positions to overweight from market weight, a move that comes on the heels of last week's nomination of ex-president Jose Sarney, an ally of new President Luiz Inacio Lula da Silva, to head the Senate.

After weeks of negotiations, the deeply divided Brazilian Democratic Party (PMDB) agreed on Sarney as its candidate, a move likely to bolster congressional support for Lula's agenda of economic reforms. Lula, who ran on the Workers Party (PT) ticket, took office earlier this month.

"The recently sealed agreement between the PMDB and the PT provides positive prospects for the new administration's congressional agenda," said Morgan Stanley.

The decision comes as investor fears about the economic fallout of a possible U.S.-led military strike on Iraq weigh on emerging markets. Despite the uncertainty over Iraq, Morgan Stanley said it still was moving to buy Brazil.

"Brazil and Latin American assets are currently participating fully in the global sell-off in risky assets. To the degree that it is Iraq-related, we expect that this sell-off will be temporary and we are buying Brazil heading into it," it said.

Morgan Stanley said it also raised Venezuela to market perform from underperform, thanks to the prospects for a solution to a two-month-old general strike, the government's efforts to maintain reserves through capital controls and increased oil output.

Foes of Venezuelan President Hugo Chavez are staging the work stoppage in a bid to force the leader's resignation or spawn new elections. The strike has strangled oil production, the government's chief source of revenues, and raised concerns the nation may be left without enough cash to pay its debts.

Morgan Stanley said that as the strike loses steam, it expects the opposition to reach an agreement with Chavez for an August referendum on his rule, a move that Chavez may concede to because of international pressure.

This, along with the government's plans for a single fixed exchange rate and a recovery in oil output sufficient to keep the government and state oil giant PDVSA from defaulting on its debt, support the move to market weight, the bank said. (Reporting by Susan Schneider; Editing by Stuart Doughty; Reuters Messaging: susan.schneider.reuters.com@reuters.net, tel: +1 646 223 6319)