January 17, 2003 BRAZIL: LULA STARTS OFF WITH SOCIAL, FISCAL, DIPLOMATIC BALANCING ACT

January 17, 2003

BRAZIL: LULA STARTS OFF WITH SOCIAL, FISCAL, DIPLOMATIC BALANCING ACT

KEY FINDINGS

**Most onlookers give Brazil's newly inaugurated President Lula da Silva a strong vote of confidence, but recognize he is taking office under a daunting burden of high expectations.

** Latin American media regard Lula as the vanguard of the region's "democratic left" and are entrusting him to advance regional interests and stand up to the U.S. on FTAA negotiations.

** European papers anticipate trouble for a president who "promised all things to everyone."

** Brazilian writers hail the "group of friends" Venezuela initiative as a Brazilian "diplomatic victory," though some worry his perceived "pro-Chavez" stance will strain U.S.-Brazil relations.

MAJOR THEMES

Latin writers are counting on Lula but diverge on his economics and trade policies. Most were optimistic that President Lula will exert "a positive influence" and make the democratic left a "valid option" in a region where military rule and populism were the "main alternatives to the market economy." In a typical outpouring of Lula enthusiasm, Quito's center-left influential Hoy exclaimed how "South America needs a voice to defend its interests...amidst the calls for free trade!" A Bolivian paper applauded his "social crusade." Critics in Argentina, Mexico and Chile downplayed the Lula "hype," while taking contradictory views of his economic policies. Mexico's independent Reforma, argued that if Lula wants "to rescue" the region's most populous nation from poverty, "he will have to use the same pragmatic economic policies he repudiated during his years of militancy in the traditional left." A Buenos Aires paper, meanwhile, blustered that Lula already had "all the familiar symptoms" of turning "neoliberal."

Euros apprehensive about Lula's success, since winning a 'contradictory mandate.' A number cautioned that in "midst of all the cheering," the question of how Brazil, in a period of weak growth, was to "reconcile the states' responsibility for social services with budgetary discipline" had been overlooked. Most anticipated he would have a difficult time balancing the need for economic reform with his electoral promises on social programs, especially with his party lacking a majority in Congress. London's independent Economist concluded that in order for Lula to "wage war on hunger and unemployment" without upsetting Brazil's "fragile finances," he must "use his mandate and Brazil's plight to push through unpopular reforms."

'Group of friends' scores Lula's first 'diplomatic victory,' tests U.S.-Brazil relations. At first, most leading Brazilian dailies criticized Lula's proposed "Friends of Venezuela Group," claiming that it risked "crossing the fine line between legitimate assistance and interference" in Venezuela's internal affairs. Only a few dubbed it a "courageous move." Independent Jornal da Tarde's quipped "that the idea would be good if Venezuela, not its president, Hugo Chavez, were treated as a friend." Conservative papers such as center-right O Estado de Sao Paulo feared it could "prematurely end the honeymoon" between Brazil and the U.S. Once writers saw the initiative as "overcoming resistance from the USG," however, they praised the Lula administration for "succeeding in its first important diplomatic initiative in Latin America."

EDITOR: Irene Marr

EDITOR'S NOTE: This analysis is based on 56 reports from 16 countries, Dec. 31-Jan. 17. Editorial excerpts from each country are listed from the most recent date.

WESTERN HEMISPHERE

BRAZIL: "The Six Friends"

Liberal Folha de Sao Paulo editorialized (1/17): "The formation of the Friends of Venezuela group is good news for helping to mediate the political crisis between President Hugo Chavez and his opposition. The initiative represents a Brazilian diplomatic victory.... It is premature to say that the international initiative will succeed. But the group has a balanced composition that will tend to facilitate dialogue. It is important that President Lula da Silva and Brazil's Foreign Ministry adopt an impartial posture as a norm from now on. To exercise a mediation role, the GOB must gain the confidence of those who oppose Chavez.... Evidently, the same behavior is expected from the U.S. and the other members of the group.... The Lula administration wants a more dynamic role for Brazilian diplomacy in South America. It is correct policy. But Brasilia must be careful not to cross the line separating a more active foreign policy from undue interference in other nations' internal matters."

"Brazil Forms Group, But Chavez Resists Making Concessions"

Business-oriented Valor Economico Quito correspondent Sergio Leo reported (1/16): The Lula administration succeeded in its first important diplomatic initiative in Latin America: at Brazil's request, a 'Friends of Venezuela' group of nations was created yesterday to facilitate OAS-coordinated negotiations between the Chavez administration and the opposition.... The GOB's move successfully overcame resistance from the USG, which opposed the participation of nations outside the continent."

"Venezuela Is A Test For Brazil-U.S. Relations"

Center-right O Estado de Sao Paulo Washington correspondent Paulo Sotero asserted (1/15): "Although they seem to have come to terms [on the Venezuelan issue], Brazil and the U.S. have diverged on the meaning and utility of the [Friends of Venezuela] group of nations.... The Bush administration's attempt to take credit for the Brazilian proposal has not convinced neighboring nations. All of Ecuador's media is giving Lula credit for the search for a solution in Venezuela."

"Necessary Caution For The 'Friends Of Venezuela'"

Business-oriented Valor Economico editorialized (1/15): "Since U.S. policy in Latin America has been determined by persons such as Otto Reich and Roger Noriega, who see the Cuban question as the main issue in U.S. relations with the region, Chavez is considered another Castro who must be removed from power as quickly as possible.... The Bush administration doubtless believes that President Lula da Silva is closer to Chavez than former president Cardoso was, and it may try to impede excessive expansion of the GOB's influence in the region.... It is important that the Venezuelan crisis is resolved in a democratic and peaceful fashion and that relations among the American nations do not deteriorate."

"Diplomatic Mess"

The lead editorial in center-right O Estado de Sao Paulo observed (1/14): "Beginning with Lula's inauguration, the [GOB's] foreign policy has been dictated by a so-called 'national project,' which Lula's party apparently places above the national interest.... Disagreement on the Venezuelan crisis may prematurely end the honeymoon between Brazil and the U.S. that began with President Bush's invitation for Lula to visit him in Washington. This is not the only thing at stake. The Lula administration has assumed a clear pro-Chavez posture, a gross mistake for any party willing to serve in a mediating role. The lack of impartiality, especially with the adoption of measures that may be confused with interference in internal matters, disqualifies the mediator."

"U.S. Said Intervening In Brazilian Action On Chavez"

Paulo Sotero commented in center-right O Estado de Sao Paulo (1/11): "The Bush administration has intervened in the coordination efforts of the past few days for formation of a group of nation friends of Venezuela, requested of...President Lula da Silva by Hugo Chavez even before Lula took office.... The gesture showed Washington's discomfort with the first diplomatic initiative of Lula's government and the concern with assuming paternity of the idea. In its place, the United States wants Brazil to take part in a new group of countries comprised of the United States, Mexico Chile and possibly Spain, besides representatives of UN Secretary General Kofi Annan. The mission is to support a new attempt by Cesar Gaviria, Secretary General of the OAS to produce an understanding between Chavez and his opponents that would enable a negotiated solution to the crisis. The efforts made by Gaviria to that end...have been fruitless, and the confrontation between the Chavistas and the anti-Chavistas has merely gotten worse.... Washington's concern over the Brazilian role led Foreign Relations Minister Amorim to call U.S. Secretary of State Colin Powell..to 'reassure him' tabout the Brazilian initiative and reaffirm that his goal, since the beginning, has been to support a negotiated solution to the political crisis...by reinforcing the mediation work being done by Gaviria.... Behind the controversy, there also exists a latent distrust by the administration of the orientation of the new Brazilian government's diplomacy. That is fed by a calculation according to which, having decided to confirm and expand the economic model against which he campaigned, Lula will supposedly try to please his party's left wing with foreign policy actions."

"Limits of Help"

The lead editorial in liberal Folha de Sao Paulo opined (1/10): "President Luiz Inacio Lula da Silva is running the risk of crossing the fine line between legitimate assistance and interference in Venezuela's delicate political situation. All depends on the extent of his renewed plans to go on helping that nation. Hugo Chavez--as well as Fidel Castro--received special treatment at Lula's inauguration in Brasilia.... It would be nonsense for the GOB to respond positively to Chavez's requests. It would be valid in this case to speak about heavy-handed interference by the GOB in Venezuelan internal political affairs.... Recent facts have reinforced the impression that Lula is more a friend of Chavez than of Venezuela. Brazil's Foreign Ministry should do more to put itself in the middle with regard to the conflicting parties. Without gaining the confidence of Hugo Chavez's opposition, Brazil will not have the legitimacy to participate in mediating the conflict, and will run the risk of being eventually associated with a president whose prospects of remaining in power are not good at all."

"The Friend Is Venezuela, Not Chavez"

Independent Jornal da Tarde editorialized (1/10): "Lula's idea of creating a 'group of friends' to help the OAS with mediating a solution to the Venezuelan crisis would be good if Venezuela, not its president, Hugo Chavez, were treated as a friend. So far, the Brazilian initiatives in the Venezuelan crisis have not been informed by an institutional view, but by the mutual friendship between Lula and Chavez.... Assertions that the Lula administration does not interfere too much in Venezuela's sovereign affairs are not accurate."

"Lula's Cabinet, Room For Stumbling"

Catia Seabra commented in Rio de Janeiro's conservative O Globo (Internet Version) (1/8): "Still trudging through the swamp of transition to power, Luiz Inacio Lula da Silva's cabinet is making a tough discovery about the difference between discourse and practical reality. From Science Minister Roberto Amaral's bombshell to Lula's Northeast travel plans, the PT's [Workers Party] first week in government was one of run-ins and backtracks. The first big slip happened as early as inauguration day itself. In an interview, Finance Ministry Executive Secretary Bernard Appy announced the decision to seek a renegotiation of the agreement with the IMF. According to the model being conceptualized, social investments would be discounted from primary surplus calculations. Two hours later, treasury minister Marcelo Neto denied, or better, corrected the information.

"The most recent bombshell to come out of the Esplanada [Cabinet offices] was detonated by Science and Technology Minister Roberto Amaral. Still recovering from early stages of pneumonia, the science and technology minister defended nuclear bomb research. Disclaimers came out yesterday.... In a cabinet so large and not yet running smoothly, the PT has proven that there is fertile ground for stumbling."

"Lula Helps Venezuela"

Political columnist Fernando Rodrigues commented in liberal Folha de Sao Paulo (1/8): "It is impossible to say what the final result of the new Brazilian president's cordial relationship with Hugo Chavez will be.... According to Lula's international affairs advisor, Marco Aurelio Garcia, 'the president will support an OAS-sponsored negotiation so that no party involved in the Venezuelan conflict is humiliated.... The region has no interest in the conflict becoming an institutional crisis.' This is the reason for the assistance. It is a courageous move by a recently inaugurated government. The benefit or the harm to Brazil will be clear in the near future."

"Lula, Chavez And Fidel"

Liberal Folha de Sao Paulo political columnist Eliane Cantanhede opined (1/5): "The Lula administration's foreign policy did not begin with the president's visit to the White House [in December]. It began at Lula's inauguration with two singular moves: George W. Bush sent Zoellick [to whom Lula had contemptuously referred as a 'deputy of a deputy of a deputy' secretary], and Lula opened his first working day with a meeting with Chavez and closed it with a dinner with Fidel Castro.... One need not be a genius to note that the U.S. rejoiced in Lula's inauguration [by sending Zoellick] and that Lula is giving unequivocal signs that his main interlocutors will be dictator Fidel and President Chavez, who divided Venezuela and is about to fall. Both leftists. The three leaders have in common their boldness in attempting to pursue an alternative model to the single-minded Washington Consensus. The differences, however, are profound. Contrary to what is believed, Chavez's policies are consistent and viable.... In regards to Fidel, the Cuban regime lacks modernity, staff, and perspective, among other fundamental factors. What Lula is trying to do is to identify himself with the image of the two most celebrated leftist leaders attending the inauguration. But Lula wants to leap 40 years ahead of the current Fidel as well as to cleanse Chavez's policies of Chavez's own political errors.... Is this kind of magic really possible? How can Lula accommodate Bush and the 'deputy of a deputy of a deputy' within this context? And most important: if anything goes wrong, will opponents revive that 'axis of evil' myth?"

"Brazil Tells The U.S. It Fears Effects Of Wars In Iraq And Venezuela"

Liberal Folha de Sao Paulo political columnist Clovis Rossi said (1/6): "GOB officials told U.S. interlocutors that they fear two simultaneous wars (a U.S. attack on Iraq and a civil war in Venezuela) might cause a hike in oil prices as well as jeopardize any possibility of economic recovery in Brazil this year.... The mention of two wars was the way the new GOB chose to show that it disagrees with the U.S. posture in the Venezuelan crisis. Since advancing the elections would violate the constitution, the GOB (both the current and the previous one) refuses to accept them.... For Brazil, a political and negotiated solution in Venezuela is not only a matter of defending principles such as the effectiveness of democratic institutions, but also of defending vital economic interests. According to GOB officials, a call for elections in Venezuela now will not resolve anything if it is not accompanied by a political accord between the government and the opposition that establishes respect for the rules of the [democratic] game. Otherwise, the loser will move toward insurgency and civil war. Lula himself advised Chavez to negotiate with the opposition. The Brazilian president reiterated his support for Venezuela's legitimate government, but said it was important to negotiate a way out of the crisis."

"The Lula Administration's Projects For Brazil"

Business-oriented Valor Economico editorialized (1/3): "Lula delineated a clear turning point in relations between Brazil and the world by indicating [he would pursue] a nationalistic foreign policy. He put negotiations with the EU, the U.S. and the WTO on the same level, but reiterated as his priority the strengthening of ties with Mercosul and with other South American nations. Like former President Cardoso, he condemned protectionist barriers raised by developed nations against developing countries' exports. He made a profession of faith in multilateralism and urged a 'democratization of international relations without any kind of hegemony' in a clear reference to the U.S, from which he expects a 'mature partnership based on reciprocal interest and mutual respect.' Moreover, in an indirect reference to the U.S.'s increasingly bellicose posture toward Iraq, Lula reiterated that peaceful negotiations are the best way to face crises such as that in the Middle East."

ARGENTINA: "Relaunched In Air"

An editorial in liberal, English-language Buenos Aires Herald read (1/16) "Presidents Duhalde and Lula may have 'relaunched' Mercosur on Tuesday but where is the trade bloc heading? Lula and Duhalde spoke earnestly enough about a compact agenda.... But Lula's initial enthusiasm does not have much company in the bloc. Paraguay... and Argentina are both due to hold elections in 100 days on April 27, after which their governments will soon change, while Uruguay's coalition has already crumbled. How much can a Lula-Duhalde coalition be expected to achieve, however close? Tuesday's cozy huddle failed its main test, which was to start moving - otherwise it is meaningless to speak of 'relaunching' Mercosur. The trade bloc needs conflict resolution mechanisms at least as badly as a regional parliament and, as it happens, various conflicts have arisen or revived in recent days to provide readymade raw material. Both of Brazil's main recent moves into Argentina...the Petrobras acquisition of Perez Companc and Brahma's merger with Quilmes brewery - have been sharply questioned as affecting strategic industry or monopolistic... There are also Argentine complaints against chicken dumping here and what is perceived as the aggressive Brazilian use of non-tariff barriers against other food products, notably fruit. On the other side, Duhalde had to veto a sugar tariff bill hostile to Brazil. Yet all these conflicts were ignored or sidestepped on Tuesday."

"Relaunch, A Devalued Term"

Commenting on the Lula-Duhalde meeting, Luis Esnal, Brasilia-based correspondent for daily-of-record La Nacion noted (1/15): "While the successive Mercosur relaunchings became a routine activity of Mercosur administrations..., yesterday's 'relaunching' had different elements. It is perhaps the launching of a closer relationship between Brazil and Argentina... If this 'relaunching' will have the same future the previous ones had..., time will tell... It will also be necessary to see if, after some years of just a few advances, and due to the global crisis of the two main countries of Mercosur, now the Argentine presidential election campaign will again postpone the progress of the (bilateral) relationship until a new ship captain appears bringing new impetus for the relationship.... Regional poverty, which became the central issue of yesterday's meeting, is urgent. But the governments have a limited room for maneuvering, restricted by minimal proposals which do not even allow for assistance, much less growth. The objectives appear to be renewed with a Brazil energized by Lula's victory, but the people, which in the end is what makes Mercosur, are still waiting for concrete steps."

"Duhalde And Lula Will Relaunch Mercosur"

Martin Rodriguez Yebra, on special assignment in Brasilia for daily-of-record La Nacion wrote (1/14): "Both the Brazilian and the Argentine governments think that hunger will be the core of the 'political and social relaunching' of Mercosur, the reason of the summit between both presidents. Just a few times such a short visit does promise such important consequences like Duhalde's visit to Brasilia.... The Duhalde administration believes that a more defined alliance with Brazil will let Argentina strengthen a 'productive model' and reinforce its position vis-à-vis multilateral lending agencies.... Both presidents are expected to find a common position regarding diverse international conflicts, like the likely U.S. intervention in Iraq and the Venezuelan political crisis... Argentina is willing to put an end to tariff distortions concerning so much to Brazil. Also, the possibility to boost a trade bloc negotiation vis-à-vis the US, known as 'four plus one,' will be discussed. The conclusions of the summit between the two presidents will be the basis for the next meeting of Mercosur presidents in Asuncion, when Mercosur will be formally relaunched."

"According To The U.S., Lula Will Be A Focus Of Power"

Jorge Rosales, Washington-based correspondent for daily-of-record La Nacion noted (1/10): "The U.S. finds a new focus of power in Latin America in Lula's first steps, although it understands it is still too early to conclude that the expectations of regional leadership could be maintained as time goes by.... According to a diplomatic source, the Republican administration treats the leftist Brazilian government very softly and it even maintains low profile and avoids controversy with a country with which it wants to have close ties and not break bridges... The U.S.' less active role in Latin America, due to its focus on the war on terrorism..., has left free room in the region for Lula... A Washington Post editorial points out that if the Bush administration does nothing in relation to the Venezuelan crisis, 'perhaps Mr. Da Silva can assume a role of leadership.' The influential newspaper also adds that the panorama of the region, with crisis-stricken countries like Venezuela and Colombia, and weakened countries like Argentina, leads to believe that Lula could assume the role of leader of the hemisphere."

"Profile Of Brazilian foreign policy"

An editorial in leading Clarin read (1/11): "Through different statements, the new Brazilian government has demonstrated its purpose to provide its foreign policy with a high and distinctive profile. In some cases, those statements imply giving impetus to multilateral diplomacy, integration processes and a search for regional and international leadership. In some other cases, those statements, like the one made by the minister of Science and Technology, Roberto Amaral, on Brazil's nuclear development, could be counterproductive and distort the relationships among countries.... Amaral's comments...are inopportune. Further more in an international context sensitive to the use of this knowledge for the possession of weapons of mass destruction.... Conversely, the proposal for a regional initiative to help solve national crises, like Colombia's or Venezuela's, is a good example of complementing national interests and international processes calling for a more dynamic multilateral action."

"Neoliberal Terror Strikes"

James Neilson, columnist of liberal, English-language Buenos Aires Herald judged (1/9): "And what about Lula, the new leader of the antineoliberal war cabinet? Like Duhalde almost exactly a year before, he got his presidential term under way by declaring war on neoliberalism, saying that the model Cardoso had built was already outdated and that in any case it had only produced stagnation, unemployment and hunger. To make his feelings even clearer, Lula had some kind words for Cuba's Fidel Castro and Venezuela's Hugo Chavez... Does the Brazilian really mean what he says? Or is he just another cunning cult member throwing dust into the eyes of the brave men and women who are desperately striving to defend the human race against the neoliberal threat? Alas, there are plenty of reasons for suspecting that Lula, like Menem, Cardoso, de la Rua and, it seems, Duhalde is either a neoliberal already or that he will very soon be transformed into one. The familiar symptoms are there for all to see. He has started to go on about the need to control public spending and prevent inflation from blasting off. He uses typically neoliberal words like 'sustainable' and responsible'...simple codes for policies designed to make rich people even richer and poor people a great deal poorer. Just how long he will be able to get away with his double game is an open question."

"Brazilian Markets' Euphoria Triggered By Lula"

Luis Esnal, Sao Paulo-based correspondent for daily-of-record La Nacion wrote (1/7): "Optimism is the new catchword in Brazil. Six days after Lula's inauguration ceremony, the real gets revalued, the country-risk falls, the stock exchange index increases and financial markets celebrate the assumption of the new government... Yesterday, two pieces of news hit the headlines, unthinkable of a Workers' Party government: one, that the government wants a larger fiscal adjustment, and the other announcing the revolutionary purpose of cutting down labor benefits for Brazilian workers. The economic establishment is euphoric and disregards some news like the suspension of road works or the postponement to purchase Air Force airplanes... There are few domestic economic issues to be defined in the next months. Among them, what real power the new government will have in Congress to implement the reforms required by the country and how much the country's interest rate can be cut down in order to impulse economy. Among the international issues, the conflicts in Venezuela and Iraq are issues of concern, because Brazil still depends on imported oil. But Brazil has the IMF as its ally. Brazil has a 24 billion-dollar loan available in Washington and has a Central Bank president...who is more tuned with Washington demands than with the old 'fora IMF' demands from the Workers Party. Amid optimism, the profile of the new government is starting to be clearer: while Lula and his social ministers will be the face of the government in front of society, the economic officers will be guarding Lula, calculators in hand, advising to what extent his promises can be fulfilled."

"Lula's First Footsteps"

Michael Soltys, executive editor of liberal, English-language Buenos Aires Herald mused (1/7): "Much has been written over the past week over what Lula's new administration...might mean for Argentina but the most important points have been largely overlooked. The hype has largely been centered around Lula's pledge to make Mercosur his priority when his very first moves included one decision indicating otherwise - suspending road-building projects worth 1.38 billion dollars in favor of his 'zero hunger' plan when such infrastructural developments are an essential part of boosting Mercosur.... Instead Lula would do Argentina much better service if he succeeds in making the left a valid option for the region with military rule and populism the main alternatives to the market economy until now.... More concretely, Lula will enable the left to play a transcendental role if he can overcome the region's fatal dualism between solvency and growth. Both should be partners instead of mutually exclusive but the notion of 'industrial policies' of crony state contracts and protectionism have placed growth and solvency at odds with each other."

"A Tight-Rope Walker's Talent"

Oscar Raul Cardoso, international analyst of leading Clarin stressed (1/4): "For how long will Lula be able to walk on a tight rope upon which everyone seems to see him since he took power?... To Lula, the balance seems an endless task. He has just conceded the fearful right wing almost all the economic team, and, above all, the promise of the new minister of Finances, Antonio Palocci, of not abandoning restrictive monetary policies. But it will be next month, when the IMF reviews the implementation of the most recent financial aid package...and decides to make new demands, that the question on whether his concession was enough will be responded. If, as some predict, the IMF will impose one more point of fiscal saving on Brazil, how feasible will be the social policies imagined by Lula?"

"The Right To A Left"

An editorial in liberal, English-language Buenos Aires Herald read (1/3): "The only fair attitude towards Brazil's new President Lula is to reflect the spirit of change and hope which permeated his inauguration on New Year's Day.... The danger of default and the continued yearning for social justice will undoubtedly be the main challenges facing Lula. In order to confront these challenges, he has picked an economic team which very much leaves his options open..., thus covering most political ideologies and economic sectors. As for social justice, Lula is very explicit in promising 'zero hunger' for the 54 million Brazilians who lack food but far less clear as to the implications of this aim for, among other things, land reform... If Lula described his inauguration on Wednesday as 'the result of history, not an election,' the region's first need is for him to change that history. Thus far the main alternatives to democratic rule and the market economy in Latin America have been military dictatorship and populism - if Lula can create a realistic democratic alternative from the left, he will have done everybody a huge favor, including all democratic friends of the market economy. Those stressing Lula's humble origins and trade union background forget that he is also a symbol of social and regional mobility - his advent in power thus need not mean either mob rule for the poor or involuntary continuity but genuine and positive change."

"The Dispute Over Regional Leadership"

Business-financial El Cronista's opinion piece by Agustin Romero, professor of Argentine Foreign Policy at the University of Buenos Aires, asserted (1/3): "The focus of the Brazilian foreign policy regarding the American continent rests on three pillars: the relationship with Mercosur, with the U.S. and the countries of the region. Regarding Mercosur, Lula has emphasized on many occasions that Mercosur will be a priority of his government. The new administration considers Mercosur as a long-term strategic project. However, Brazil has always wanted national autonomy.... Thus, we'll have to see how both projects are entwined. Re the U.S., Lula believes Mercosur is the last defensive barrier against the FTAA.... Lula will seek to strengthen and privilege Mercosur vis-à-vis the FTAA... Nevertheless, in order to have Mercosur increase its negotiating ability.... Lula will have to change his strictly political vision of Mercosur for an economic-commercial one. Finally, what is behind the FTAA and Mercosur projects and discussions is the competition between the U.S. and Brazil for the leadership in Latin America and Brazil's search for bigger autonomy... Regarding neighboring countries, Lula's bigger challenge will be Colombia. The U.S. is expected to pressure Brazil very much to involve it in the Colombian crisis. Washington wants Brazil to share the information from Sivan (Amazon Surveillance System) with Colombia, to limit its criticism of U.S. actions in Colombia and to moderate its view of the principle of non-intervention in the domestic affairs of countries."

"Lula Announces To Congress That He Will Carry Out A 'Peaceful Agricultural Reform'"

Eleonora Gosman, on special assignment in Brasilia for leading Clarin wrote (1/2): "As never before, the new Brazilian president has devoted a considerable amount of time to explain what his foreign policy will be.... He will bet on 'a stable and united South America.' And he thinks that a revitalized and consolidated Mercosur should be the basis for this purpose... He promised an 'open and substantial' dialogue with Latin America. Regarding the Brazilian relationship with the US, he only mentioned he wants to 'live together in mature harmony'... In relation to China, India and Russia, (Lula) wants closer ties and an association for international affairs.... He said he also wants closer ties with the EU. He only made a slight mention of the FTAA. He pointed out he will fight to obtain fairer rules that will benefit the country.' Brazil will fight protectionism and trade barriers'.... Lula insisted on the need for changing the world power balance and promote, along with other developing countries, the necessary instruments to obtain an effective multipolarity. He also said he favors the 'peaceful resolution' of international conflicts... In obvious reference to the episodes in Venezuela, he said his government would defend the democratic clauses promoting respect for constitutions and legality... Lula linked two of the main points of his program: the agricultural reform and the fight against hunger. According to him, both things are united. If there is land distribution and technological and loan support for the farmers' families, it will be possible to create more sources of food for the poor."

"Towards A Closer Relationship With Argentina"

Luis Esnal, Sao Paulo-based correspondent for daily-of-record La Nacion judged (1/2): "Lula's presidential inauguration represents for Argentina the deepening of its relationship with Brazil, perhaps on a level never before reached since the origin of Mercosur, ten years ago. While the Cardoso administration was favorable to Mercosur and Argentina, Lula went beyond: in addition to choosing Argentina as the first destination of his official visits, he ratified in his yesterday's address to the Brazilian Congress the commitments undertaken during his election campaign, when he emphasized the importance of South America in the new Brazilian foreign policy... With these words, and his recent assistance to Venezuela with oil amid the opposition's strike, Lula confirmed that Brazil would from now on have a more active participation in the reality of neighboring countries in search for the role of leader of the region... The concrete benefits Argentina can obtain from this new stage are, for example: the Brazilian support in its dealings with multilateral lending agencies; a smoother negotiation over trade disagreements, with a better Brazilian treatment in the event some Argentine production sector is being damaged; and, lastly, the joint exploration of new markets to export from a 'Mercosur base.' Lula's emphasis on Brazil's intent to fight subsidies gives a sign that he is not planning to use subsidies, much less in his relationship with neighboring countries, like Argentina."

"Lula Takes Over Under The Promise Of Putting An End To Hunger"

Eleonora Gosman, on special assignment to Brasilia for leading Clarin commented (12/31): "Lula will take over having promised something elementary but indispensable: putting an end to hunger in Brazil, which affects 54 million people, one-third of the Brazilian population.... Lula will be the political leader who will break the surprising parallelism of public life between Brazil and Argentina that was typical of the 20th century. For Argentina, Lula's taking power is a change capturing more attention for what Brazil implies... (according to former foreign minister Di Tella, 'it is like having a China next to you'). But also because the current and next Argentine president will have to negotiate for a long time with new political leaders, and he will have to understand their thought and language. There are two elements one needs to know, which were precisely defined by a Brazilian banker: 'Lula is a big negotiator. He has no enemies and likes to brag about that. But when time comes to decide, he ends up doing what he wants.'"

"Workers To Power"

Luis Bruckhstein, columnist of left-of-center Pagina 12 opined (12/31): "Beyond the result of this stage, it will be hard to cloud the deep change implied by a left-wing worker taking over as the president of the largest and wealthiest country in Latin America. For decades, the prevailing new liberal culture has only admitted for this continent the laboratory politics, the one of left- or right-wing experts from Harvard or Chicago... The incredible mass movement and counter-culture promoted by the Workers' Party in Brazil was able to defeat those new liberal paradigms. It was not a mass phenomenon like the one of the Argentine center-to-left wing... but an overwhelming process involving workers' unions, groups of peasants, students and professionals, middle class and bourgeois sectors... that were able to take a worker to the presidency... It will be a landmark that will leave its footprint on Latin America."

"Lula Will Take Over The Presidency Tomorrow Amid Popular Fest"

Luis Esnal, Sao Paulo-based correspondent for daily-of-record La Nacion wrote (12/31): "A fundamental stage will start tomorrow in Brazil when Lula takes over as president, the first worker to assume the presidency in the history of the country.... Lula's presidential ceremony is also a historic step for the Brazilian democracy, because no democratically elected Brazilian president has been able to transfer his presidential band to a successor since 1961.... The almost unanimous optimism raised by Lula's assumption contrasts with the difficult challenges to be faced by the new government. To start with, Lula will not be able to immediately fulfill his promise to increase minimum wages because the economic situation of the country does not allow him to do so. He will not be able to reduce the Brazilian interest rate either...because if he did he could unleash inflation. To avoid the return of inflation, the government will have to maintain policies restricting growth, without which it will not be easy for Lula to fulfill all the promises he made for every sector.... Both world leftists and rightists are rejoiced with Lula's victory: leftists, because one of its historical leaders will assume power in one of the largest nations of the world. Rightists will be rejoiced because the new government has ratified the economic policy of Cardoso, by calling the former world president of a US bank to lead the Brazilian Central Bank, among other measures."

"Brazil Prepares Lula Fest"

Andrew Graham-Yooll, columnist of liberal, English-language Buenos Aires Herald wrote (12/31): "The feast of installation in office, which will gather an attendance from all over Brazil, will be on a par with the pope's visit and the celebration of the victory of the late Formula 1 driver Ayrton Senna.... From everywhere, for the foreseeable future, there is nothing but goodwill and wishes for Lula's success. Well, from almost everywhere, as out of Miami came a leaflet printed by a so-called 'Unidad Cubana,' which describes Lula as part of the 'real axis of evil,' which spans Cuba, Haiti, half of Colombia, and Venezuela, and now Brazil... Lula held his first 'Cabinet meeting' on December 27... By then Lula had already ordered a tanker carrying 525,000 barrels of fuel to Venezuela, a gesture similar to that of the old saying of sending 'coals to Newcastle'...as such a shipment is merely symbolic. However, the symbol was clear enough. Even if the shipment is a token gesture, it was seen as Lula's message that he will take a high profile in regional affairs."

MEXICO: "Hope"

Sergio Sarmiento judged in independent Reforma (1/3): "The Latin American Left seems to have bet all its emotional capital on the Brazilian presidency of Luiz Inacio Lula da Silva. The curious thing is that they never did the same with Venezuelan President Hugo Chavez, who was always viewed as a populist caudillo...nor did they do this with Chilean President Ricardo Lagos, who is the most successful leftist president in all of Latin American history. If Lula listens to his most radical colleagues, and adopts policies similar to the ones he advocated in his prior presidential campaigns, we could witness a moratorium on Brazil’s debt obligations. This would confirm the enthusiasm of the left toward the new president and would cause a temporary 'bonus' in the nation...however, this measure would also halt the flow of private investment and would generate a worse crisis over the next few years. On the other hand, if Lula decides to uphold Brazil’s debt obligations, his administration will not have enough funds for greater public investment to stimulate the growth that Brazil needs, and after a certain period of time, the same groups that are currently filled with enthusiasm will begin to view him as a politician who betrayed his principles. The policies that Lula will administer are still a mystery…but if he really wants to rescue the most populous nation in Latin America from poverty, he will have to use the same pragmatic economic policies he repudiated during his years of militancy in the traditional left."

"Brazil: The Possible Dream"

An editorial in far-left Jornada held (1/3): "The new Brazilian president, Luiz Inacio Lula da Silva, began his administration yesterday with signs of hope in domestic and regional politics. To begin with, the government’s combination of strength and sensibility, massive popular support for the new administration, and approval from financial and business circles augers the possibility of a profound social transformation in a nation that is marked by deep social inequities and a world environment in which there seemed to be no other choice than resignation in the face of injustice. None of the progressive and popular presidents that took power by democratic means in recent history in Latin America—Jacobo Arbenz, Salvador Allende, Jaime Roldos, and Hugo Chavez—enjoyed such a plural, articulate, and broad consensus as the one built by the Labor Party and its historic leader, Lula. In regard to regional politics, its is possible that Lula’s inauguration will breath new life into the search for alternative proposals to neoliberalism in order to solve the huge social debt that the majority of Latin American governments have incurred, due to corruption, ineptitude, submissiveness, or a combination of all of these flaws."

"Lula And His Party"

Adolfo Sanchez Rebolledo mused in far-left Jornada (1/2): "In many ways, the success of the new Brazilian administration happily headed by Lula will depend upon support by his party, the Workers’ Party (PT) that led him to victory. It is true that the social force supporting Lula and the PT does not make up a homogenous subject, or a single class, but neither is it an inorganic multitude under the mandate of one leader. In this regard, Lula is not a caudillo like Chavez, nor is he a victorious guerrilla like Fidel Castro in 1959; rather, he is the head of a popular, leftist, and new democratic party. Beside the obvious lessons of perseverance and vision, Lula’s triumph provides useful lessons for those who wish to take advantage of them. The first and most elementary lessons is that a leftist party cannot win a democratic election if it is not capable of winning support form the broadest sectors.... For some, this shift of the PT 'to the right' comes close to treason, but the evidence is overwhelming; thanks to his center-left positions, Lula won more than 50 million votes (61.3 percent). Maintaining the internal unity of the PT will not be easy, but achieving this will be one of the conditions to govern by putting general interests first. The cards are on the table and history is just beginning."

BOLIVIA: "The Era Of Lula da Silva"

Left-leaning La Prensa carried an editorial stating (1/3): "The inauguration of Lula da Silva in Brazil...seems to mark a new era in the region, provided he accomplishes what he outlined in his inaugural speech.... He championed a stable and prosperous continent, united in democracy and social justice.... He claimed that the current economic system is not producing development but rather stagnation, unemployment and hunger, and that he would only allow his country's participation in the Free Trade Area of the Americas if Washington ends what he called its scandalous protectionism and subsidies and moves instead to more just and adequate rules of exchange.... Given Brazil's importance in this part of the world and the influence of its economy over the rest of South America, it is evident that over the next four years a new reality in international relations could develop."

"Lula's Promise: Eradication of Hunger"

An editorial in conservative La Paz El Diario judged (1/3): "We think that his objective is a paramount one that should be pursued, not only in Brazil but in all the continent.... The beginning of this new regime in our neighboring country is a praiseworthy one, considering that the wellbeing of that country will reflect on the rest of its neighbors.... There is a popular saying that if Brazil gets a cold, Bolivia gets pneumonia. This could work in the opposite direction if Lula manages to achieve the well being of his fellow citizens.... Let us hope that the example of this social crusade will be followed by the rest of the nations in this part of the world, and that Brazil achieves the projections of its leader."

CHILE: "The New and Permanent Brazil"

Conservative afternoon La Segunda ran an editorial asserting (1/2): "Brazil is a nation with strong institutions, with powerful and autonomous federated states, a stable armed forces...and a consistent foreign policy.... The new president's decisions will be determined, for better or worse, by several of these elements. His efforts to strengthen Mercosur seem legitimate, as does his desire to define an alternative to the power of the United States and to fight excessive agricultural subsidies and trade protectionism.... Brazil must be realistic and avoid...the temptation to follow its own path... (It must) solve its current challenges and perform its (leadership) role in the region."

"Lula Takes The Reins"

Government-owned but editorially independent La Nacion commented in an editorial (1/2): "Luiz Inacio Lula da Silva's speeches are to a great degree realistic about the tasks that await him and of the problems he will face in accomplishing them. But the speeches are also optimistic, because they reflect the hope the people of Brazil have in him, because they have felt the international sympathy that the victory of the center-leftist coalition has generated.... If it resolves its debt problems and creates an appropriate environment for investment, Brazil is a nation with an enormous growth potential. The first stage will be crucial, because it will determine the chances for the new administration to generate confidence domestically and abroad.... Brazil can exert a positive influence in the region if it applies policies that are a synthesis between economic growth and equity."

"Lula da Silva's Example"

Leading financial Estrategia editorialized (12/30): "Luiz Inacio Lula da Silva will take office as Brazil's president on January 1... With the same force with which he has promised to end hunger in some sectors of his country, Lula has been candid and assertive in bringing the expectations of his fellow citizens to levels that are compatible with Brazil's international financial obligations... Lula will take office with a vote of confidence from foreign markets...but it is obvious that he will also try to apply fiscal and social security reforms and will try to maintain minimum wages while controlling inflation. All these elements are essential if he is to succeed in refinancing Brazil's foreign debt, which will give him a greater margin to answer to his country's social demands."

COLOMBIA: "Travel With Lula And Discover Brazil"

An op-ed by writer Daniel Samper in top national El Tiempo (12/31): "New Lula government brings up a lot of hope.... We are hoping Lula will lead the road to socialism with liberty in Brazil.... We Colombians may once and for all hope to be attracted by Lula and clear the barriers which separate us from such a fascinating country.... Lula may be the bridge for to overcome misunderstanding and a dangerous mutual disinterest."

ECUADOR: "Lula da Silva In Power In Brazil"

A front-page editorial in Quito's center-left influential Hoy (1/4): "Luis Inacio Lula da Silva's presence in Brazil's Presidential palace changes the array of forces in the region since he represents the most powerful and organized leftist party in South America, the Workers' Party, and Silva himself embodies the politics of those who are so-called "globo-phobic" in the largest economy on the continent after the U.S.... In his first statement as president, he criticized Washington's agricultural subsidies, subsidies that put agricultural exports from Latin America at a disadvantage....this is nonsense since...globalization offers South America a key role in the production of basic commodities.... The hard question is -- should Lula lead a movement aimed at reshaping the economy of Latin America?"

"Lula And South America"

An "Analysis" column in Quito's center-left influential Hoy pointed out (1/3): "The new Brazilian President, Inacio da Silva, has committed his country to a new role in international affairs, aimed at defending the interests of South American countries. Lula announced that Brazil would fight to achieve fairer relations in international trade and better conditions for the creation of the Free Trade Area of the Americas.... How refreshing to hear these statements from the new Brazilian President! How much South America needs a voice to defend its interests in the region amidst the calls for free trade! Latin America, with few exceptions, has the impression it is being pushed indiscriminately to open its markets, while the same approach is not being applied to the North.... Lula's position does nothing more than express, quite clearly, the vision we all share of the process of open markets and world trade in Latin America.... What Latin America needs is to recover some of the sovereignty it has lost in managing its economy.... The new Brazilian President's position on the FTAA coincides with that of the recently named Minister of Foreign Affairs for the new Ecuadorian government. Pacari has stated that joining the FTAA under the conditions set forth by the U.S. would be suicide. Ecuador does not oppose the FTAA, but like Brazil, it wants to redefine the conditions of its participation.... Free trade is necessary and convenient, but it must be part of a regional approach that protects national interests, that does not threaten local productivity and that allows businessmen from every country to compete under equal conditions, taking into consideration, of course, the status of developing countries."

"Lula, The Hemisphere is Waiting"

An editorial in Quito's leading centrist El Comercio (1/2): "Brazil, for Latin America, has always represented hope, uncertainty, and a dilemma.... Against a backdrop of fanfare and high expectations, President Jose Inacio Lula Da Silva was sworn as President of the largest country in Latin America. He knows first-hand the hardships faced by his country and the hemisphere--populism, repression, and corruption. He understands, as few do, the present condition of his people --misery, despair, and hopelessness. Like the former caudillos of his country, he must assume leadership of this large and troubled nation that is Brazil."

"Lula's Case and Its Repercussions"

An opinion column by Jorge Ribadeneira Araujo in leading centrist El Comercio held (1/2): "It seems that Lula assumes the presidency of the Latin American giant at a good time, but, as it always happens with every country in Latin America, at a difficult time. The reality is that the citizen who most represents of the Brazilian left is now in power and his country today goes about its business normally, but with a sense of expectation. 'The world changed, Brazil changed, Lula changed,' said this poor Brazilian who was once a worker, a union leader, a perennial candidate, today is the President of a power with a great future, but that is full of contrasts... Lula is no longer the enemy. At first sight he is a respectable, mature individual without prejudice, with whom it is possible to disagree and even to argue with rationally, for example on issues such as FTAA and U.S. subsidies and protectionism."

GUATEMALA: "Lula da Silva And His Historic Challenge"

Leading, moderate morning Prensa Libre said in its main editorial (1/2): "In Brazil and abroad the new regime is viewed as the result of a popular reaction to neo-liberalism in Latin America... Lula da Silva has the possibility of becoming the president who, without abandoning his popular roots, gives meaning and form to a new way of governing, adapted to the reality and needs of today's world. That is the challenge for Brazil, if not for all Latin America."

PANAMA: "Lula To Power: Cut In Costs"

Conservative El Panama America ran inside editorial stating (1/3): "Brasilia's inauguration speech was moderate and had no typical carioca exaggerated myth. Lula spoke about a gradual development ... and after meeting with Fidel Castro and Hugo Chavez, Lula was rather moderate, being careful not to show himself as part of a group of problem countries.... Time will show Lula's administration encounters with the social responsibilities obtained by those that voted for him."

PERU: "Markets Optimism vis-a-vis Lula"

Reliable business daily Gestion headlined its (1/10): "The markets have a sort of honeymoon with Lula's government.... Such an optimistic reaction might have been caused...by the naming of his minister of Economy and of the chairman of the Central Bank. However, some people point out that ... there remains much to do so Brazil doesn't confront problems later on.... Lula's Administration should continue structural reforms and keep making fiscal adjustments, which might be contrary to (Lula's) electoral promises that have created high expectations among (Brazilian) people and in leftist members of his cabinet."

"Lula To The Right?"

Serious tabloid Correo editorialized (1/2): “It seems that the brand new president of Brazil, Lula, will be one more proof of how it is necessary to reach power through the left in order to govern with the right in Latin America... From his nominations and announcements, he is perceived as a man conscious that the road of development passes through the free market and the promotion of private investment... Though it is certainly too early to assure that the conversion of Lula (from left to right) is a definite fact, some clues indicate that at least the tough reality of power seemed to have tamed exaggerated ideological aspirations."

EUROPE

BRITAIN: "Lula's Burden Of Hope"

The independent weekly Economist observed (1/4-1/10): "'Hope and 'history' are two words Brazilians often use in talking of their new president, Luiz Inacio Lula da Silva.... The hope is that Lula...will restore Brazil's economic fortunes in a way that lifts up the poorest in a notoriously unequal society.... Lula promised to wage war on hunger and unemployment without upsetting Brazil's fragile finances. Now, after a smooth handover of power...he must start to live up to this heavy burden of expectations.... Everything argues for tough monetary and fiscal policies--except Lula's campaign promises and the hopes of Brazilians for a return to rapid economic growth and poverty reduction. But the president's best chance of success lies in using his mandate and the gravity of Brazil's plight to push through unpopular reforms.... A test of confidence will come in February when the IMF will review its $30 billion loan to Brazil..... The new government seems likely to adopt a pragmatic stance on trade policy despite the PT's traditional support for protectionism.... [The] approach to the talks on the Free Trade Area of the Americas is likely to be assertive but not hostile.... Brazil's prospects turn on whether Lula can turn these pragmatic intentions into policy achievements. He will face...not just a Congress in which he lacks a majority, but pressures form friend and foes alike.... The government will have to haggle for every victory in a Congress with an insatiable hunger for pork. Brazilian presidents normally enjoy a six-month honeymoon. Lula will hope that his sweeping electoral mandate will buy a longer indulgence from voters and PT radicals alike. He will try to ensure this by using the word "social" as every opportunity.... If the social offensive is to have substance, it may come from Fome Zero (zero hunger), a planned partnership of government, firms, charities and pressure groups to imporve the welfare of the poor."

FRANCE: "Lula"

Right-of-center Le Figaro editorialized (12/31): “A former admirer of Castro, Lula has chosen to devote his first visit abroad to President Bush, rather than following on the populist footsteps of Venezuela’s Hugo Chavez.”

GERMANY: "Lulamania"

Left-of-center Frankfurter Rundschau commented (1/3): “Lula will have hard time fulfilling everyone’s expectations. Washington, stubbornly clinging to economic liberalism as the magic bullet, is pleased to see the old left-winger turning into a free trader. Poor Brazilians, on the other hand, cling to Lula’s lips as soon as he promises ‘breakfast, lunch, and dinner.’ One question has not been asked in the midst of all the cheering: How to reconcile the state’s necessary responsibility for social services with budgetary discipline and the lowering of debts?... It is important for the international community to realize that a debt-ridden state cannot be a just state. This should be reason enough to think more carefully about debt cancellation. And the economically strong should abandon their practice of demanding free trade from the weak, while protecting their own products with help of subsidies and tariffs.”

"Under Pressure"

Guenther Bannas opined in center-right Frankfurter Allgemeine (1/2): “President Lula...might soon find himself in a difficult position. Even if he displayed superhuman political skill and had a broad and stable majority in parliament (which he does not), Lula would not be able to avoid disappointments and their repercussions. After all, the Brazilian people have given him a contradictory mandate. They want a market economy, but also more social security and a fairer distribution of wealth. In addition, Lula has promised all things to everyone. It is doubtful whether a disciplined financial policy, a must for foreign creditors, can be reconciled with improved social security and higher wages.”

ITALY: "An Uphill Road For Lula's Brazil"

Alessandro Merli reports asserted in leading business Il Sole 24 Ore (1/2): "The main difficulty the new president has to deal with is how to conciliate a policy, which, as he acknowledged himself, has to be of austerity in the presence of weak growth, with the promises he made in his campaign, even though Lula is trying to get some funds to increase social spending and to fight against poverty, which is the real focus of his electoral manifesto. Indeed, some of the reforms the country urgently needs, as the tax reform, and the reform of the pension system, go against the interests of some important groups of Lula's supporters, as the public employees, who now represent the majority in the Worker's Party.... Moreover, Lula does not have the majority in Congress, and this is a very serious problem for him, especially if he wants to make Constitutional changes, where a 60 per cent majority is needed.... But, at least for the first weeks, he will be able to count on an unprecedented people's support, thanks to the 62 per cent of votes he received in the October elections. The success of his four year mandate and the possibility for Brazil to really get out of the present crisis will depend on how he plays this card."

RUSSIA: "Lula Is The Leader Of Brazil"

Commenting on the official change of authority in Brazil,Nikolai Komin, analyst of Parlamentskaya Gazeta, the mouthpiece of the RF Federal Assembly judged (1/5): "Thorny is the path which the new president is to take. The people have forgiven him the expensive suits and luxury cars but will the people continue to forgive him empty wallets and stomachs?... Will Lula's dream come true? It is not to cause a collapse of the economy but also to feed the hungry and assure for Brazil a worthy place in today's world? One would like to wish him luck.

"A Left-Winger At The Head Of Brazil"

Sergei Bazavluk wrote in the centrist Trud (1/5): "Luis Ignacio Lula da Silva, who comes from a poor family, has confidently won the presidential election last October. Over the past 40 years he is the first Brazilian leader considered to hold left views. Lula is promising his people to cope with the economic difficulties but, perfectly aware of the seriousness of the situation, he says his people should not expect swift change.... As his first step, the new president decided to give up buying for the Brazilian air force a number of fighter planes worth about 700 dollars. He said that in a country where one-third of the population live below the poverty line and 15 percent are undernourished, the money will be used to meet social needs."

AFRICA

SOUTH AFRICA: "Why Being There For Lula Counted For South Africa"

Group political editor John Battersby wrote in liberal Sunday Independent (1/5): "Meeting a longstanding engagement, Mbeki spent the first day of 2003 attending the...inauguration of Luis 'Lula' da Silva as president of Brazil.... Both countries...are leading nations of the developing world that have failed to benefit from the advantages of globalization.... Both leaders...face the major challenge of how to effect costly social reforms with very little money. Both have to tackle the problem of land distribution to alleviate inherited inequalities.... Both leaders with a common leftist background, have committed themselves to integrate their countries in the global economy.... Both have also committed themselves to the fight against poverty."