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Pragmatism boosts Brazil's 'Lula'

Leader's rating high despite recession

SAO PAULO -- A year in office has transformed President Luiz Inacio Lula da Silva of Brazil from left-wing populist to self-styled pragmatist, at home with working stiffs and Wall Streeters alike.


Unlike leftist Hugo Chavez of Venezuela, who has antagonized both investors and industrial workers and is being dogged by a recall campaign, da Silva is riding high with a 70 percent approval rating in a December poll by the Sensus public opinion research group.

Stocky, bearded, and gravelly-voiced, da Silva projects a rough-hewn charisma. He is fiery on stage, but turns smiling backslapper behind the scenes. It's a leadership style popular in South America's biggest country.

"We have a strong aversion to ideology," said political scientist Amaury de Souza at the MCM consulting group. "Brazilians are not prone to war or revolution."

The day after his inauguration last New Year's Day, da Silva had breakfast with Chavez and dinner with Cuba's Fidel Castro, but he has steered a centrist course in dealing with Brazil's slump.

"Little has changed in a year, but you can't blame Lula for that," pushcart vendor Arlete Xavier said, referring to the president by his popular nickname. "He inherited a recession."

Xavier did not vote for da Silva, but says she might cast her ballot for his reelection in 2006 if Brazil's economy improves.

Investor jitters, big debt, and high interest rates dragged Brazil's economy into recession in the first half of 2002. Disdaining government spending as a way to attack the slump, Antonio Palocci -- da Silva's finance minister, physician, and a former big-city mayor -- has held down the budget and gradually cut interest rates.

His approach won Brazil $14 billion in International Monetary Fund credits, which helped stabilize the currency and restore investor faith. It made both Palocci and his boss into Wall Street darlings.

Economists are now forecasting economic growth of at least 3 percent in 2004, with inflation down to 6 percent, less than half the rate in 2002.

Not everyone is happy. "I keep hearing that things are getting better, and they are, for big business," said Joao Rocha, an unemployed building superintendent.

Rocha regrets he voted for da Silva. He has been out of work for five months, putting him among the 13 percent of the work force on the unemployment rolls.

The Brazilian Census Bureau estimates 23 million people, in a population of 178 million, as destitute.

Marcilio Pereira, an ex-convict living in a Sao Paulo halfway house run by evangelical Christians, is one of them. "I have to borrow clothes to go to job interviews," he said. "I beg money in the street for lunch. I have a dream: food, shelter, and a nice shirt."

Others have prospered under da Silva. They tend to be the same as those who were favored under his predecessor, Fernando Henrique Cardoso, whose probusiness policies aimed at promoting investment and exports.

"I'm way ahead this year, beating the [Sao Paulo Stock Exchange] Index," said Alcides Fernandes, a retired bank worker whose hobby is investing.

The exchange index recently broke above 21,000, up from an early-year trough of 8,000. Fernandes reckons he tripled his money, several thousand dollars, in just a few months. While some, like Pereira, were begging for meals, Fernandes bought a new car and redecorated his house.

Many Brazilian farmers have also hit the jackpot, mainly because of a soybean boom that has Brazil on track to pass the United States as the world's biggest soy exporter.

"The mood among farmers is euphoric," said Robson Mafioletti, an adviser to soybean cooperatives in the southern farm state of Parana. "We have had five straight years of burgeoning crops and rising prices. Farm income in Parana rose an average of 24 percent per year in the last decade. People are driving new cars and buying more land."

Walder de Goes, a political risk analyst in the capital, Brasilia, expects da Silva to benefit from embracing pragmatism. "This is not a country to fall into turmoil like Argentina or Venezuela," he said.

The reasons are not just cultural. Brazil is big, about the size of the continental United States. "But only about 10 percent of Brazilians belong to trade associations or labor unions," Goes said. "Even if there were a climate of revolt, it would not translate into organized action."

For ordinary Brazilians, radical change is a remote and even disturbing thought.

"I voted for Lula, and I'll vote for him again," said Rosemeire Viera, an out-of-work cashier. "Times are tough, but I'm not giving up hope, and I'm not giving up on Lula."

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