In Brazil, 'Lula' makes run for president

Without his once-ubiquitous baseball cap and T-shirt, former union leader Luiz Inacio Lula da Silva is not the man he used to be.

More often found in a suit and tie these days, the candidate from Brazil's leftist Workers' Party (PT), has the appearance of a changed man. And he is confident that an updated political outlook will catapult him, after a fourth try, into the president's office.

"It's never been this easy," the man known as Lula said last week. "The race is ours to lose."

With just three months to go before the Oct. 6 ballot, most polls give Lula about 40 percent of the vote, almost 20 percentage points more than his closest rival, Jose Serra, the candidate of President Fernando Henrique Cardoso's Brazilian Social Democratic Party. If no candidate wins an absolute majority in the first round, then a run off will be held Oct. 27.

Lula is confident that his time has come. More polished than in the previous three elections, he has helped guide the Workers' Party toward the political center. At the same time Lula – the honorary president of PT – has continued to win respect as one of Brazil's most honest politicians. That's not a huge task in this country of 175 million people known for its widespread corruption, but it's enough to give him an advantage over Serra, a former health minister whose candidacy is floundering because of discontent with the ruling party.

The dissatisfaction among Brazilians has centered on Mr. Cardoso's inability to provide jobs, bridge the soaring gap between the country's super rich and dirt poor, and stop the violence that is turning the country's cities into war zones.

The former metalworker from Brazil's impoverished northeast has made those issues his priorities, pledging, among other things, to introduce a food-stamps program to help feed the 44 million Brazilians living in poverty, and invest $35 billion to start building 6 million low-cost houses.

Such promises have resonated, not only with the country's poor, but also, increasingly, with the middle class. Many people lament the lack of progress made during the second of Cardoso's two four-year terms, and while they admit that Lula has little experience in government, they feel he makes up for it with integrity.

"It's not that I think he'll be able to resolve all of Brazil's problems, but I think that at least he will make life a bit better for the working man," says Mario Roberto, a retired taxi driver.

Lula's critics, however, are worried about his economic policies. Investors are spooked by the thought that under the suit and tie, there still beats the heart of a radical unionist. Lula, for example, campaigned in 1989 on a promise to default on the country's debt. He has moderated that position in the years since, last month telling foreign journalists: "If we want to be respected, we must honor the agreements we have," but the markets are still nervous about his standing in the polls.

Although few people believe Brazil will go the same way as Argentina – the country's debt is growing but most of it is internal – political analysts say many people are worried because they simply do not know what a Lula government would bring. That, they added, is partly because they do not believe Lula has truly changed and partly because what they hear from him differs from other sectors of the Workers' Party.

"Investors realize that the party is more radical than the party leadership, and they wonder who, if he gets elected, Lula is going to pay attention to," says Christopher Garman, a political and economic consultant with the Sao Paulo firm Tendencias. "The PT has emphasized the necessity of maintaining the low-inflation policies that Cardoso has established, and ... that's a significant advance. (But) what really gets investors is that these generic comments in favor of maintaining macroeconomic stability are not congruent with a number of policy proposals that he has."

Lula has made belated efforts to soothe the frayed nerves, naming a probusiness senator as his running mate. The markets, however, are still nervous, and not even a pledge to maintain the current government's economic targets during a transitional phase could dispel the unease.

Analysts say that could be because the economic worries are exacerbated by political concerns. Although the PT has extensive and relatively successful experience in government, it has little chance of gaining a majority in Congress and would be forced to negotiate to get even the most basic legislation through parliament. Winning the confidence of the business sector under such conditions would be a challenge for any politician. It is therefore only natural, says former Central Bank President Gustavo Loyola, that investors are skeptical at the prospect of seeing Lula at the controls. No matter how much he may have changed.