www.csmonitor.com from the January 27, 2003 edition ERALDO PERES/AP

MAN OF THE PEOPLE: President Luiz Inácio Lula da Silva (center) poses with children at the World Social Forum in Porto Alegre, Brazil.

Brazil's new leader takes an unlikely global role President da Silva speaks to political and business leaders in Switzerland.

By Andrew Downie | Special to The Christian Science Monitor

PORTO ALEGRE, BRAZIL – Brazilian President Luiz Inácio Lula da Silva had a message Sunday for the world's political and business leaders meeting Davos, Switzerland, at the annual World Economic Forum.

"It is absolutely necessary to build the world economic order to meet the demands of billions of people who live at the margins," Mr. da Silva said, urging rich countries to declare "war on hunger."

This call for attention to social issues is not surprising coming from a former union leader and socialist. But the fact that he would be making it to the world's elite on an international stage is unexpected.

When he took office on Jan. 1, after more than two decades as the leader of Brazil's left-of-center Workers' Party, most people thought the man known as Lula would concentrate his efforts on resolving domestic issues. The former shoeshine boy speaks no foreign languages and had shown no particular aptitude, or interest, in foreign affairs.

Now though, his trip to Davos - coming on the heels of a stop at the World Social Forum in Porto Alegre, Brazil, the anticapitalist answer to the Davos meeting - shows that Lula is hoping the developed world will hear his message as clearly as the developing one, and perhaps even embrace him as the man capable of bridging the gap between the two. The only sitting president to attend both weekend summits, Lula has surprised politicians and analysts with vigorous international forays that have given Brazil a much higher profile, particularly in its own backyard.

Brazil needs "to assume its greatness," Lula said on a visit to Ecuador earlier this month, the first foreign trip of his presidency. "I find it incredible that all the other South American countries see Brazil as a natural leader for the continent. Brazil was the only one who for 500 years didn't see that or want to do anything about it."

Not all its neighbors were keen to see Brazil become the region's dominant power. That was partly because the former Portuguese colony's distinct culture, language, and history set it apart from its Hispanic neighbors; and partly because other Latin American leaders were reluctant to see Brazil, the nation with the largest population and economy in the region, become too strong.

Lula's predecessor, Fernando Henrique Cardoso, made some moves to change that, playing active roles in ending a border dispute between Peru and Ecuador in 1995 and also by discreetly helping Paraguay solve its political problems a few years later. In August 2000, Mr. Cardoso hosted South America's first presidential summit.

Lula has taken up the baton, primarily with troubled neighbors Venezuela and Argentina. He has extended a hand to Argentina as it tries to recover from the worst economic crisis in its history, offering to rework a regional trade agreement and even enter into talks on a common currency and joint parliament.

Even more enthusiastic, however, has been his involvement in Venezuela, where opponents of President Hugo Chávez are eight weeks into a national strike aimed at toppling him. Lula was instrumental in creating of the "group of friends," six nations (Brazil, Chile, Spain, Portugal, the United States, and Mexico) that hope find a peaceful way out of the crisis.

Although he objected to the inclusion of the US and Spain in the group - an objection he later dropped - Mr. Chávez has responded favorably to Lula, flying to Brazil to meet with the man he considers an ally. But he has not secured Lula's unfettered support. Lula remains impartial, telling those wanting to oust Chávez that their actions must be made within the Constitution, while at the same time counseling the Venezuelan leader that he must negotiate with his opponents for a peaceful solution.

Lula's handling of the situation has given him and his fledgling administration some international credibility.

"The [Workers' Party] has made it very clear it is a social democratic party in the making," says Riordan Roett, a Brazil expert at Johns Hopkins University in Baltimore, Md. "They want nothing to do with dictatorship or authoritarianism or anticonstitutional moves. And while [Lula] politically and psychologically identifies more with [Fidel] Castro, [Ecuadorean President Lucio] Gutierrez, and Chávez ... he realizes very well that he has to have a very pragmatic and shrewd foreign policy."

Mr. Roett and other experts acknowledge that the US is probably not overjoyed at Lula's close relationship with Mr. Castro, or his willingness to engage other presidents, like Chávez or the leftist Mr. Gutierrez, who have never hidden their dislike of US policy and influence.

Some, like Rep. Henry Hyde (R) of Illinois, chairman of the House International Relations Committee, have even gone as far as to say that Lula may have posed as a moderate in order to win the election and then form, with Chávez and Castro, a Latin American axis.

Lula's words and actions since taking power call in question that prediction, and with President Bush paying little attention to the region - the administration did not send high-ranking officials to the inaugurations of either Lula or Gutierrez - the way may be open for Lula to continue carving out a leadership role.

"Brazil has always had good diplomats," says Mauro Silva, a union leader attending the six-day Porto Alegre summit, which is due to wrap up tomorrow. "Lula knows how to talk to people. It was a skill he learned as a trade-union leader. He could be a mediator ... and a bridge between [the right and left]."

www.nytimes.com By JONATHAN FUERBRINGER

NVESTORS dread contagion in emerging markets. But barely four weeks into 2003, Brazil is showing that living close to a big debtor can be good for its neighbors' health.

"The direction Brazil takes will govern to a large extent the way perceptions of Latin America go," said Mohamed El-Erian, who as head of emerging market portfolio management at Pimco has bought millions of dollars in Brazilian bonds.

Although the election of Luiz Inácio Lula da Silva signaled a sharp turn to the left in Brazil, the new president has done everything an investor could want. His key appointees have been "technocrats and orthodox economists," said Mr. El-Erian. "The policy implementation is totally in line," he added, noting decisions to increase social spending by delaying the purchase of jet fighters and canceling highway projects.

The central bank reinforced that conclusion last week, raising its benchmark interest rate half a percentage point to 25.5 percent. Despite the threat to economic growth from higher rates, the government backed up its promise to curb inflation.

That orthodox performance has paid off for some of Brazil's neighbors, as well as for Brazil itself, as the fear of a debt default by Brazil has waned. Three big bond sales, $2 billion from Mexico, $1 billion from Chile and $500 million from Colombia, have gone well in this improved environment, said Jose M. Barrio- nuevo, director of emerging markets strategy at Barclays Capital.

The total return on J. P. Morgan's index of Brazilian bonds is 0.7 percent so far this year and 43.9 percent since just before the October election. Other Latin bonds are faring well, with Peruvian bonds showing a total return of 0.9 percent this year.

Mr. El-Erian said fragile economies like Peru could benefit further from developments in Brazil. Pimco's $436 million Emerging Markets Bond fund bet 5 percent of its assets in Peru at the end of November, a huge bet for such a small country.

But even Brazil's good performance, Mr. Barrionuevo said, will probably not help Ecuador, which defaulted on its debt in 1999.

Ecuador's new president, Lucio Gutiérrez, is a left-leaning retired Army colonel who led a coup that toppled President Jamil Mahuad in 2000. But like Mr. da Silva, Mr. Gutiérrez has been pragmatic, dropping proposals to scrap Ecuador's dollarized currency and to not make payments on foreign debt.

aLTHOUGH Ecuador's bonds have rallied this year on hopes for new aid from the International Monetary Fund, Mr. Barrionuevo does not think Mr. Gutiérrez can win approval of the strong fiscal measures needed to get assistance from the I.M.F.

Mr. El-Erian is avoiding bonds from Venezuela, which is in the midst of a nationwide strike against President Hugo Chávez, and those from Argentina, because of the risk of further declines.

There is, however, a lot of value in Brazilian debt, despite its recent rally, Mr. El-Erian said. He would not disclose how much Pimco has invested overall in Brazilian bonds. .

But Pimco's emerging market bond mutual fund, had 22.8 percent of its assets in Brazil in November. That is up from 20 percent in November and more than the 16.1 percent share in one of the fund's benchmarks, the J. P. Morgan index. Including investments in its non-mutual fund accounts, Pimco holds $9 billion in emerging market debt.

Of course, he warned, Mr. da Silva has not proven he will stay this orthodox course. And investors could flee the risk of Brazil during a war with Iraq. "Then Brazil would suffer just like other countries," he said. Such a fear-of-war selloff sent Brazilan bonds sharply lower Friday.

Business in Italy - Special service by AGI on behalf of the Italian Prime Minister's office

(AGI) - Agrigento, Italy, Jan 25 - War prevents the economy from growing. For the economy to develop and recover, it needs peace instead. This message of peace comes from the Bank of Italy governor, Antonio Fazio, who was at the Agrigento Forex convention, giving an outline of the international economic scene which is still full of uncertainty and which could be very badly affected by an armed conflict.

"An armed conflict," Fazio went on to say, "brings with it consequences that are difficult to gauge in that it has an effect on raw materials and energy, upsetting normal financial and commercial business on a global level, the business on which the considerable performance of the global economy has been based over the past ten years, increasing the chance of new terrorist attacks. The benefits of a pacific co-existence," added Fazio, "and of the continuous research into the international common good are advantageous to everyone: people, families and nations".

The governor's analysis of the international economic scenario is full of pessimism. He said, "Interpreting the economic picture has become difficult and complicated over the past few weeks. "The most recent data from industrialised countries is proving to be full of gaps and question marks which have a telling influence over investment activity. Fears of military and political conflict seem to be having an enormous effect". Only a lessening of these tensions, the governor added, "can set off an increase in production on a global level before the end of the first half of this year". And this hypothesis is supported, in Fazio's view, by recent performance on the stock markets.

"At the end of December," he explained, "statements by the American government on the possibility of avoiding an armed conflict gave an immediate boost to share prices in all the principal stock markets". Then, he added, "the way the situation evolved and the positions that were taken once again had a negative impact on shares prices and the cost of crude oil".

All this in a context that, outlined by the governor, is proceeding very uncertainly. "This uncertainty," he said, "is of interest to all the industrialised economies and any economic recovery immediately suffered a slow-down over the past few months".

In the USA, where trends "during 2002 affected performance in Europe and Japan", the indicators "produced contrasting signals on progress over a short period". There were positive signals coming from manufacturing but "industrial output is still slightly down but share investments are continuing to expand". Fazio gave the thumbs-up to the measures that Bush approved for tax cuts worth 670 million dollars over ten years and to the Fed's monetary decisions. Whilst he continued to be very concerned, on the other hand, about Europe where "in the first nine months of 2002 the GDP increased by little more than half a percentage point compared with the same period during 2001". Fazio explained that we felt the weight of "the weak economic performance in Italy and Germany" where consumption was stagnant, investments were down and the GDP over an entire year was 0.7 per cent, down from the 1.4 per cent of 2001.

Speaking of the global situation from the podium of the ninth AIAF, Assiom and ATIC Forex Convention, Fazio said, "In Europe, the start of the considerable structural reforms to public finances and labour market are crucial in order to make the economy more flexible so as to use the new technologies to become more competitive and increase the level of development". One state of affairs, i.e. the lack of structural reforms, is also of concern in Japan where "the trend of aging demographics is hanging over the country (as is the case in the Old Continent)" and where production remains "characterised by rigidity and inefficiency". (AGI)

251459 GEN 03 COPYRIGHTS 2002-2003 AGI S.p.A.

www.upi.com By Bradley Brooks UPI Business Correspondent From the Business & Economics Desk Published 1/23/2003 2:43 PM

RIO DE JANEIRO, Brazil, Jan. 23 (UPI) -- Brazil's new leftist leader will bridge the globalization gap this week, speaking first at the World Social Forum then at the summit which that gathering is meant to protest: the elite World Economic Forum in Davos, Switzerland.

On Friday, President Luiz Inacio Lula da Silva will become the first-ever leader of the Brazilian government to speak at the World Social Forum, which opened Thursday in Porto Alegre, Brazil.

For many of the 100,000 activists in attendance, Lula, as he is known, and his October election in Latin America's largest country represents the best hope in lessening economic inequalities between the First and Third Worlds.

"After participating for the third time at the World Social Forum (previously as an activist), I'm going to Davos to demonstrate that another world is possible," Lula said in a Thursday statement. "Davos needs to listen to Porto Alegre."

He said there was an need for a new pact that would bridge economic disparity.

"I will take to Davos the message that the rich countries need to distribute the wealth of the planet," he said.

Great words of hope, no question, that most people wouldn't disagree with: who doesn't want to see a more efficient global economy that would make us all more prosperous? The great difficulty, of course, is backing those words with the grueling work that goes into tackling global economic issues: drug patent fights, agricultural subsidies, stalled talks on the proposed Free Trade Area of the Americas.

It is the bare-knuckled arena of international trade negotiations and Brazil's role of representing the Third World where Lula's appetite for either pragmatically making headway or falling back on ideological differences will be tested.

"One of things that will be important is not only his bridging the globalization gap, but his keeping the discussion of the gap alive," said Margaret Keck, a political science professor at John's Hopkins University, of Lula's role in representing poor countries.

Keck, whose book "The Workers' Party and Democratization in Brazil" was the first major study of Lula and the political party he helped found, says Lula has the potential to be a Third World leader who can act as both a catalyst and a salve as rich and poor countries try to reach mutual understandings.

Yet for others, Lula embodies a Latin America that is veering to the ideological left, where voters have recently elected leaders whose apparent opposition to American-style capitalism gives fright to some Bush administration officials and leaders on Capitol Hill.

It was just at last year's World Social Forum that then presidential-candidate Lula told reporters, "I'll fight with all my power to stop the FTAA in Brazil."

Others point to his friendliness with Venezuelan President Hugo Chavez and Cuban leader Fidel Castro as evidence that Lula is going to lead Latin America in the wrong direction.

That worried a few Republican congressmen enough that they sent a letter to President Bush before Lula's October election, expressing concerns about the threat of having a wild-eyed leftist running Latin America's largest economy.

Keck rejects these arguments, saying that it is simply too soon to tell if Latin America really has aggressively gone to the left, or if the left in Latin America has simply wised up and come more to the center, where it can win elections.

"Despite all the connections that get made between Lula and Castro and Chavez, the fact is he is very different from them, his history is extremely different from theirs," Keck said.

"It is important to have somebody out there as an international spokesman for bridging the globalization gap, someone who has legitimacy and who doesn't raise the same kinds of knee-jerk ..'well, he was a revolutionary and radical populist' .. response."

Lumping Lula in with Chavez or Castro is inaccurate at best, and, truth be told, a wholly simplistic vision of a region comprised of extremely different countries, but that for short-hand purposes becomes "Latin America" in the United States.

Lula himself has disavowed any connection with the political beliefs of Chavez or Castro, repeatedly saying he has no intention of leading Brazil to economic self-destruction, like Chavez.

The fact that Lula received more votes than any other democratically elected leader in the history of the world -- with the exception of Ronald Reagan's 1984 election -- should be evidence enough that he is no Castro.

But the proof, clearly, will be in the pudding, and whether Lula is truly intent on taking his country out of its miserable economic state will be seen in how he addresses his dualistic concern: uplifting the poor by bringing more economic justice to the world.

Marta Lagos, the director of Latinobarometro, a Santiago, Chile-based group that tracks public opinion in Latin America, told United Press International in November that the notion that the region is swinging to the left can't be viewed through the same prism as it was during the Cold War years.

"There is no leftist revolution before us, nor is there a military regression," Lagos said. "The left and right as they were in the past is gone. The alternatives are not a socialist state versus capitalism. Today, the market economy has no competitor."

Just how Lula intends to make Brazil competitive in the global economy -- and what sort of example he will provide for the rest of the developing world -- is yet to be seen.

But for Keck, Lula's past experience of leading union negotiations against Brazil's military regime makes him a savvy spokesman ready to take to the world stage.

"Lula and the Workers' Party have a lot more experience in governing than it used to," Keck said. "That has made most people in the party aware of the costs of radicalizing expectations too much, too quickly."

"It has given people more realistic notions of what is possible."

www.sofiaecho.com Jose Augusto Lindgren Alves

OF all the European media that covered the first events of 2003, French newspapers, not to mention the Portuguese, seem to have best grasped the meaning of a seemingly routine fact on the other side of the world: the inauguration of Luis Inacio Lula da Silva as President of Brazil.

I do not refer only to the leftist Liberation with its tender-sounding frontpage headline: "Au boulot, Lula!" Nor do I particularise the stimulating "Viva Brasil!" by I. Ramonet in Le Monde Diplomatique. I do bear in mind the coverage of the Brazilian situation by different journalists in the French media - to which I gladly add the moving hour-long programme on the Italian TG2, that I saw here in Bulgaria.

Important for their content, those articles detract from the daily published flood of "non-news" the world over, about the sale of football players among competing teams, marriages of pretty, powerless princesses, or unnecessary shows of military might for a war nobody seems to want. While enticing the consumers, insistence on such non-events (to speak of Jean Baudrillard) distracts public attention from the much closer, widespread problems of poverty, disease and hunger that can breed the crime, racism, genocide and terrorism we all abhor.

Lula was chosen by more than 60 per cent of an "electoral college" of 115 million - all the citizens of voting age (voluntary at 16, compulsory at 18) - in a computerised balloting system (voters simply pressed buttons with the colour of their candidates) that brought out the results in a few hours. Its fairness and technical perfection were praised by all. They proved that a peripheral state, of mid-level development, does not need to belong to a privileged group of rich and powerful to display exemplary behaviour.

In his capacity as Head of State of the largest Latin democracy, the new President of Brazil is a case in point, for many reasons.

Born in a poor family of eight children, in one of the poorest regions of the northeastern backlands, Lula and his family migrated to Sao Paulo, where they first lived together in only one room, at the back of a bar. At an age when other kids play with toys, he was a street peddler of peanuts and a shoe-shiner. Having made elementary studies at school, at 12 he got work in a laundry. After performing several odd jobs, he obtained a place on a course to become a metal worker. It was during his employment as a lathe operator that he projected himself as a union leader, who co-ordinated strikes in the seventies, and became an outstanding opponent of the military regime. In that period Lula was arrested and first labeled a "leftist" (a label that then applied to most of his present opponents), more inspired by Lech Walesa than "Che" Guevara. His charisma and intelligence led him to found, with different social forces, the Workers' Party, soon to become, under his guidance, one of the most formidable political forces in the country.

Since 1989, when he ran as a candidate in the first direct presidential suffrage after the military take-over of 1964, the label of "leftist" has been branded on Lula with the aim of turning ordinary people against him. It is true that the Workers' Party has always been on the Left, gathering Trotskyites to mild social democrats. Nevertheless, however radical his discourse might have been in the past, Lula is a man who evolves, for he learns from the lessons of time and his own political defeats. He knows that the period of Revolutions has passed, that capitalist globalisation is now an unavoidable trend. But he also knows that globalisation cannot go on as it is, disrupting lives and countries in the name of competitiveness, disguised under the fallacy of short term economic efficiency.

As far as I could follow from translations, few newspapers in Bulgaria tried to analyse Lula's victory. One of the exceptions - and a very positive one - was the article by K. Kadrinova, in Sega, on January 13. Her analysis is good, except for the confrontational tone she lends to the new President. He does not intend to be a nail inside anybody's shoe.

An authentic leader with very humble origins, Lula represents for Brazil an encouraging sign of social mobility. He is the first non-elite personality ever to attain the highest political position in a country that is rich, but full of social contrasts. Having suffered in his own skin - and his own stomach - the distresses of poverty, malnutrition and hunger, the first programme he has launched, dubbed "Zero Hunger", sets the aim of ensuring that all inhabitants of Brazil may sometime enjoy the luxury of three meals a day. If he succeeds in this simple goal, difficult to achieve in the circumstances we all live, rather than a nail in somebody's foot, the Brazilian experience might become a lighthouse to help steer our times out of today's global gloom.