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From Prison to the Brink of Power

Latin America: The man poised to win Brazil's presidency doesn't forget his radical roots. His candidacy inspires some and worries others.


SAO BERNARDO DO CAMPO, Brazil — Djalma Bom remembers the radical leader who got his start outside the doors of this city's factories, making impassioned speeches about capitalism, class warfare and Brazil's socialist future. A generation ago, Bom shared time in prison with him.

Today, the legend of that man, known simply as Lula, looms large over Brazil. As the country prepared for elections today, Luiz Inacio Lula da Silva was the overwhelming favorite to become president and bring his leftist Workers' Party to power, a fact that filled millions of Brazilians with hope--and millions with dread.

"Lula has the profound sense of compassion and justice that Che [Guevara] had," said Bom, comparing Lula to Latin America's most famous guerrilla fighter.

"The country is about to be subjected to political laboratory experiments," countered Ariosto Texeira, a columnist for O Estado de Sao Paulo newspaper.

According to all polls here, Lula had double the support of his nearest competitor. He might even win an outright majority and avoid a runoff--a prospect that has sent Brazil's currency and its financial markets tumbling.

If Lula wins, it will be in large measure because the election has become a referendum on Brazil's decade-long embrace of free trade and globalization. As the consummate outsider of the Brazilian political scene, he rode a wave of popular discontent with corruption and 8% unemployment.

Although he has tried to move to the political center, Lula would likely make major shifts in this country's relations with the United States if he won. He has accused the U.S. of trying to "annex" his nation with unfair trade policies and says the Bush administration has shut off U.S. markets to Brazilian agricultural exports.

"The United States has been intransigent in the defense of its interests," Lula told foreign journalists in Sao Paulo last week. "We Brazilians also have to be intransigent in defense of our own interests."

With ruling-party candidate Jose Serra running a distant second--some polls showed him trailing by as much as 26 percentage points--a host of Brazilian commentators and business leaders has begun preparing for what had been unthinkable just a year ago: a Lula presidency.

Roberto Setubal, president of Banco Itau, Brazil's largest bank, tried to reassure investors in Washington on Tuesday. "Lula's victory is not a revolution," he said. "He's going to have to make alliances with others, and he knows it."

Setubal, like many here, blamed the ruling party's poor showing in the polls on Serra's failings--the former health minister has a reputation as an unfeeling technocrat--rather than on a rejection of Brazil's current economic "model."

"Lula is an honest man," Setubal said. "Lula speaks from the heart. Serra also is a good man, and he is honest. But he doesn't speak to people's hearts."

Although some business leaders, such as Setubal, don't expect a President Lula to bring drastic changes, many Wall Street analysts believe that a Workers' Party administration would toss out the budget targets set in a $30-billion loan deal between the International Monetary Fund and the outgoing government of Fernando Henrique Cardoso.

Those analysts also think that Lula would try to make good on promised reforms in health and education--forcing the government to default on Brazil's $260-billion debt. (Lula has given mixed signals about whether he would abide by the IMF agreement, but he has said Brazil will not default on the debt.)

On Sept. 24, when a poll put Lula within a few percentage points of an outright majority, the Sao Paulo stock market plummeted. So did Brazil's currency, the real, which has continued to fall. In June, $1 bought 2.5 reals; at one point last week, it bought 3.8.

Although the real's fall has, in effect, made most Brazilians significantly poorer in relation to the rest of the world, it has done little to affect Lula's standing in the polls. Instead, the slide seems only to have confirmed a central theme in his campaign: that Brazil is being hurt by powerful outside forces, including the "speculators" of the world's financial markets.

"A country the size of Brazil can't be crying, watching television as the dollar goes up and the stock market falls," Lula told the foreign press. "The stupidity of these speculators has no limit. Brazil will not go bankrupt."

To his most loyal supporters, the devaluation is just another chapter in the Lula legend.

Brazil's elite have always tried to bring Lula down, the supporters argue, recalling the military dictators who threw Lula the union leader into jail in the late 1970s, as well as the media barons at TV Globo network, who party militants believe conspired to sabotage his first campaign for president, in 1989.

"This time won't be like before because the Brazilian people are informed now," declared Fred Maia, a Workers' Party activist who joined 100,000 people for a rally in Sao Paulo on Sept. 29. "Lula's victory has become inevitable."

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