Lula's big win.

Author:Encarnacion, Omar G.
Position::Reflections - Luiz Inacio "Lula" da Silva, Brazil

Latin American elections rarely attract attention in the United States, but the Brazilian presidential campaign that concluded last October 26 was an exception to the rule. This was to some degree expected given Brazil's increasing importance to global markets. Befitting its rank as the world's ninth largest economy, Brazil is the recipient of $420 billion in foreign investment, much it from American corporations. However, it was the cast of characters bidding to succeed President Fernando Henrique Cardoso that piqued American interest in the Brazilian elections. Holding everyone's attention was the front-runner and eventual winner, Luiz Inacio "Lula" da Silva of the left-wing Workers' Party, widely portrayed in the American media as hostile toward U.S. interests and a potential force for reshaping the Latin American political landscape. Unsurprisingly, the response of Wall Street and Washington to Lula's victory has been apprehensive. Indeed, the question of what to expect from the new Brazilian administrati on appeared to have been settled in some quarters of the U.S. foreign policy community even before Lula's formal inauguration on January 1.

The day after Brazilians gave Lula a resounding victory at the polls--with an unprecedented 61 percent of the vote--then-Secretary of the Treasury Paul O'Neill sought to calm nervous investors by noting that "Lula was not a crazy person" and that he was confident of Lula's capacity "to implement sound economic policies." O'Neill's backhanded compliments could hardly have served to assuage fears about the impact on global markets of Brazil's turn to the left. Last August, in an appearance on NBC'S Meet the Press, O'Neill upset the usually polite world of international diplomacy by publicly questioning Brazil's capacity to manage its economic affairs and predicting economic chaos under a Lula regime. These comments, widely seen in Brazil as part of an effort by the international financial community to discredit Lula and revive the fortunes of his main opponent (Jose Serra, of the Social Democratic Party), sent the Brazilian currency into a free fall and prompted President Cardoso to demand an apology from the A merican ambassador.

More ominous still are the predictions for Brazil's political trajectory under a Lula administration, which range from the paranoid to the hysterical to the truly ridiculous. Surveying the range of scenarios being sketched by politicians and pundits, one observer posed the question: "Is Brazil in the final countdown to Armageddon?" (1) In a letter to President Bush timed to coincide with Lula's victory, Henry J. Hyde, chairman of the House International Relations Committee, warned that Lula is a "dangerous pro-Castro radical posing as a moderate." (2) The New York Times reported rightwing fears about the possible reactivation of Brazil's nuclear weapons program and an emerging "hostile alliance of Cuba, Venezuela, and Brazil" headed, respectively, by "a triumvirate of Castro, Chavez and Lula." (3) An editorial published in the Washington Times last August cautioned that Lula "could lead Brazil down the dark path toward terrorism given the likelihood that his presidency might foster a radical regime with close links to state sponsors of terrorism such as Cuba, Iraq and Iran." (4)

There is a strong sense of deja vu in these gloomy forecasts. As it has done so often in the past, Washington...

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