Lula's Long Road

It's a long way from Caetes, in the dusty Brazilian northeast, to the gleaming marble halls of the presidential palace in Brasilia. But presidential hopeful Luiz Inacio Lula da Silva of the leftwing Workers Party (PT) woke up this morning a giant step closer to completing that journey.

Riding a nationwide wave of support, this migrant's son, who fled the starving northeast and then sweated his way from a Sao Paulo metalworks to the center stage of national politics, easily beat three rivals in the first round of Brazil's presidential elections yesterday.

Da Silva, or Lula as Brazilians know him, did not manage to obtain the outright majority he needed to avoid a runoff against his closest competitor. But with 99 percent of the votes counted today, he drew 46.5 percent of the valid votes, double the 23 percent of his nearest rival, the Brazilian Social Democrat Party's Jose Serra. Two other candidates, Anthony Garotinho, of the Brazilian Socialist Party and Ciro Gomes, of the Popular Socialist Party, polled 18 and 12 percent, respectively.

The 56-year-old Lula faces another round of voting on Oct. 27. His challenge: to beat the pro-government candidate Serra, a 60-year-old economist and former health minister, who bears the imprimatur of outgoing president Fernando Henrique Cardoso. Once again, Lula will have to stitch the skies of this continent-sized country in a final sprint to convince a majority of Brazil's 115 million-strong electorate that he is the right man to nudge the nation out of economic slumber, honor foreign debts, hold down government spending, woo chary investors, and at the same time start paying Brazil's huge "social debt" to the poor and forgotten.

This is a huge, and confounding task, especially for a nation that has lurched through four years of stop-and-go growth, and been badly bruised this year by global economic turmoil. Brazilians seem ready for a change. PT candidates have scored important gains in Congress and in several races for state governors. However, the prospect of a victory by a former radical leftwing candidate has roiled the markets for weeks now. With investors fleeing emerging markets worldwide, Brazil's currency, the real, has lost 68 percent since its inception in 1995 and 38 percent just this year. The country's risk rating has spiked, driving the spread on Brazil's bonds to scalper's rates--over 20 percent above the rates for U.S. Treasury bills. With the elections still in abeyance, more turbulence is almost certainly in store in the weeks to come.

Serra has billed himself as the "reliable" candidate who will preserve the gains of recent years. These include low inflation, less red tape and reform of the money-losing social security system. Not surprisingly, he is still the preferred choice for most business executives and moneyed people who traditionally run things in Brazil. Until now, however, voters seem underwhelmed by this meticulous, professorial policy wonk. Serra himself hasn't always helped. Much as former U.S. Vice President Al Gore distanced himself from the tarnished Clinton image, Serra has been coy about his connection to his influential boss Cardoso, whose popularity has slipped as Brazil has fallen on hard times.

All projections for a runoff point to a crushing victory for Lula. However, this has been a rollicking campaign--with all four candidates rising and falling in the polls like horses on a carousel--and a second round election is hailed as a brand new contest. Whatever happens, Lula's showing is already being hailed as a remarkable feat for a union man who quit school after fifth grade and learned his first lessons about political power on the picket line, often at the blunt end of a police nightstick. He has run for president three times before, leading the way each time right until election eve, only to falter at the ballot box. Many pundits and pollsters had predicted much the same for Lula's fourth and, presumably final, run for the presidency.

But Lula seems to have weathered well in defeat. The PT has grown into Brazil's fifth-largest party, and stands to gain even more Congressional seats and governorships when all the votes are finally counted this week. Lula himself took a good hard look in the mirror. He shed the sweaty workshirt for handsome tailored suits and went beyond the factory gates to seek support in the front offices and board rooms of Brazil. Gone are the snarling harangues against "savage capitalism" and the demands to renege on Brazil's foreign debt. Though he can still make the militantes in their Che Guevara T-shirts swoon with talk about throwing speculators in jail, standing up to Uncle Sam and browbeating the "egoistic" Brazilian elite, off the stump he has been quietly networking among bankers, factory owners, and CEOs. "We want to offer investors something more serious than high interest rates and speculation," he often says. "No one represents economic stability as much as I do."

The message seems to be working. In early October, some 650 business executives pledged their support to his candidacy. A few of them, like Lawrence Pih, a big Sao Paulo wheat importer, are longtime supporters who are tired of Brazil's tight money orthodoxy and the depressed economy. Others, clearly, have been drawn by the whiff of power. "Businessmen are pragmatists, not poets," says Pih. "This is a joint venture. Businessmen know either we swim or sink together."

The strategy is risky. Lula has lost support on the left, from those who believe he drifted too far to the center. At the same time, many capitalists refuse to support him because they say he hasn't gone far enough. Then again, Brazilians often talk like radicals, only to vote like moderates. So far, at least, Lula seems to have found a prosperous middle way.

Lula's Long Road | News