But the man known to all by his shop-floor nickname–Lula–has altered much more than his appearance. Having lost three previous presidential elections, he’s decided to abandon the fiery rhetoric–“savage capitalism,” “debt moratorium now!”–for which he’s long been known. These days, he sprinkles his speeches with references to “fair trade” and “global markets,” and talks of the importance of “fiscal responsibility.” What gives? “The world has changed,” Lula asserts, “and I’ve changed too.” Over the next couple of months, Brazil’s 115 million voters will be weighing whether Lula’s makeover seems genuine or not–and more important, whether he seems capable of managing South America’s largest economy. He holds a respectable lead over three challengers, but Ciro Gomes, a fast-talking former governor from the center-left Socialist Progressive Party, is closing in fast.
What is most interesting about Lula’s political remake is that it runs counter to the current political mood in most of South America. As he moves to the center, many politicians in the region are hustling to conjure up again what Council on Foreign Relations scholar Kenneth Maxwell calls “the populist illusion.” It is back in vogue as people watch their economies fall and their jobs disappear. A serious capitalist backlash has flared in Peru, Bolivia and Paraguay. Street protests have turned violent. Even Carlos Menem, the cashiered Peronist whose profligacy damaged Argentina, is enjoying a comeback. “Clearly people are frustrated, and many blame the current economic model,” says Princeton University economist Jose Alexandre Scheinkman.
Brazil, too, has its problems. A record 1.8 million people in So Paulo, the country’s ailing industrial heart, are out of work. Last week the real fell to a record low, the internal debt ballooned to a record $250 billion and the Big Board at the So Paulo Stock Exchange was drenched in red as investors cashed out of stocks and debt paper. Brazil’s sky-high interest rates, needed to refinance its debts, suffocate growth. David Malpass, chief global economist at Bear Stearns, believes that Brazil’s current economic program “is pointing towards [debt] default.”
In the past, such economic troubles would be low-hanging fruit for presidential aspirants, and Brazil’s have been helping themselves. But they also sense that voters have little appetite these days for rank political opportunism. That message has not been lost on Lula or on any of his rivals. True, all three leading presidential contenders–even the government’s official candidate, Jose Serra–are braying about how different they are from outgoing President Fernando Henrique Cardoso, once a highly regarded reformer whose bold agenda got bogged down in recession and his own lame-duck dithering. All have pledged to promote a kinder capitalism. But in contrast to other pols in the region, they’re all also eager to show how sober-minded they are–how they understand the imperative of holding down spending and honoring debts. “This is a campaign of convergence, not of extremes,” says Alexandre de Barros, a political analyst in Brasilia.
Like a sage older brother in a fractious family, Brazil is trying to stand above the regional fray. Perhaps that’s because the country has made economic progress over the past 10 years. The government has stabilized its currency, opened its doors to global investors and emphasized the importance of having a budget surplus. In marked contrast to Argentina, the banking system is solid. By rights, those structural achievements ought to favor Serra, a respected economist. But voters have not warmed to his stiff, professorial mien.
Gomes may be the hardest to read. At 44, he is a rising star in Brazilian politics. He ably governed Ceara, a desperately poor northeast state. In 1994, he served briefly as Finance minister, but played only a minor role in the formation of the currency plan that stopped inflation and got Cardoso elected president. But as the real has flagged, Gomes’s fortunes have risen, despite the fact that he’s short-tempered and has surrounded himself with some of the patriarchs who fashioned the policies he now scorns.
Lula is a more affable figure. Polls show that while some 34 percent of respondents support him, at least 40 percent say that he is their least favorite choice. Perhaps that’s because many people remain unconvinced by his less confrontational agenda–“Lula Light,” as one Brazilian news magazine put it. That said, his policy platform, released last week, did contain some surprises. In it, he pledges to pay Brazil’s debts, aggressively push tax reform and overhaul the money-losing pension system. “He accepts fiscal responsibility, and acknowledges that debt is a problem of arithmetic, not ideology,” says Walter Molano of the Connecticut-based investment house BCP Securities. “It all sounds very reasonable.” Still, many analysts worry about what lies buried between the lines in the PT’s policy program. There is much talk about paying Brazil’s huge “social debt” to the “excluded” classes: creating 10 million jobs, doubling the minimum wage in four years and extending pension benefits to the unemployed. Little is said about how those bills would be paid.
Through much of last year, Brazilians crowed about how they immunized themselves from the turmoil blowing up from the pampas. Brazil was not Argentina. But now virtually every candidate has tacked abruptly and issued dire warnings about the perils of contagion. Brazil may not fall down, but the country has little room for economic error. Nuts-and-bolts pragmatism is what Brazil needs more than anything. If Lula truly gets that, he might break his losing streak.
