Lula's Brazilian Victory Working Class Hero, Wall Street Darling

Despite accusations of corruption, the poor love him. On Sunday, that support translated into a landslide election victory for Brazilian President Lula da Silva. He now has reform on his mind.

By in Rio de Janeiro

Brazil's President Luiz Inacio Lula da Silva was re-elected on Sunday.

Brazil's President Luiz Inacio Lula da Silva was re-elected on Sunday.

The old-fashioned Jobi Bar, located in the affluent Leblon district in Rio de Janeiro, is normally a quiet enough place. Aging Bohemians sip their "chopp" in the small beer garden and check out the behinds of pretty girls who pass by. Most of the regulars have only ever seen political violence in television reports about foreign countries.

That changed, though, one evening shortly before Sunday's second round of the Brazilian presidential elections. Outside the Jobi, a group of flag-waving supporters of President Luis Inacio Lula da Silva bumped into a few ladies who were campaigning for the opposition candidate Geraldo Alckmin. The opposing groups began to shout furiously at one another -- no insult was spared.

In the heat of combat one of Alckmin's supporters forgot her good manners and bit off a piece of the finger of one of Lula's supporters. The victim was rushed to hospital and the police are now investigating the incident.

A divided land

The "Battle of Jobi," as it was mockingly described in some newspapers, seems at first to be nothing more than a bizarre campaign anecdote. But it also illustrates a dangerous tendency in the political conflict within Brazil: The biggest country in Latin America is divided as never before.

"The victory belongs to all of Brazil," was the slogan on the T-shirt worn by Lula, when he appeared before the press on Sunday evening following his resounding victory with 61 percent of the votes. Lula wants to heal the rift that has been left behind by the election campaign.

For four weeks, the two opposing candidates had goaded their supporters into a messy mud-slinging contest. Alckmin repeatedly bombarded the head of state with dossiers and accusations of corruption, who in his turn countered with polemical attacks on the "elite" who wanted to use all the means at their disposal to prise the "working class president" out of office.

Lula courted the voters on the left, who, in the first round of the election, had vented their disappointment by drifting to other candidates. Alckmin wooed the poor in the North and North East, who still identified with Lula despite the corruption accusations.

The former governor of São Paulo, a stiff technocrat and an Opus Dei follower, had surprised many by forcing the incumbent into a run-off. However, in the second round he seemed to run out of arguments: No one wins an election in Brazil with corruption claims alone, especially not against the charismatic Lula. The poor worship the president almost as a saint. They see the former shoe cleaner and street vendor as one of their own.

Social mobility for many poor

He hasn’t disappointed them. Millions of poor Brazilians have been able to move up into the lower middle class under Lula and the unfair income disparity -- only some countries in Africa have a wider gap between rich and poor than does Brazil -- has improved during his term in office.

Lula is now reaping the rewards of his orthodox economic policy. Inflation is under control and Brazil's currency, the Real, has never been stronger. Alckmin seemed to offer no convincing alternatives when it came to economic and social policy. And that became all too apparent at the ballot box. Even Wall Street had hoped for a Lula victory. The banks have never earned as much as during his government and the São Paulo stock exchange broke record after record.

Before he took office in 2002 the banks viewed the former trade unionist as a communist Beelzebub, now they praise him as a role model. His promotion to the darling of the financial markets is an irony of history: It was Lula of all people, the one-time bogey man of the International Monetary Fund, who paid back Brazil's debts.

With its rigid budgetary policies his government was able to create the conditions for a reduction in interest rates. The reduction was particularly beneficial for the poor; they pay for most of their purchases in installments. At the same time Lula freed up money to invest in vast social programs. In the north and northeast, entire villages now live on "Bolsa Familia," a welfare aid program.

"More on their plates and in their pockets"

"For the first time the poor have more on their plates and in their pockets," said Lula in his victory speech in São Paulo. The tension of the past weeks has dissipated, the president hadn’t seemed so relaxed in a long time. He even answered a few questions from journalists: During his second term Lula also wants improve what has been a difficult relationship with the press.

Above all the president pledged clean relations with congress. In the future he wants to take over negotiations on alliances with other political parties. During his first term he delegated coordination with opposition politicians to a trusted friend, who then used a number of backhanded tricks to secure majority votes for the government.

Politicians were bribed, entire political parties were living off illegal donations from the government. When the scandal broke, many of the president's closest colleagues were forced to resign. Lula maintained that he knew nothing of his colleagues' intrigues, although even his supporters didn’t really accept that.

For his new term Lula has announced a long overdue reform of the political system. "Our party system has failed" says his former press secretary Ricardo Kotscho, who has just published a book about his experiences in Lula's government. The fact that there is no party whip means that for every parliamentary vote, the president has to look for a new majority. "The president is a hostage of the system," says Kotscho.

Hundreds of supporters gathered in Sao Paulo to celebrate Lula's landslide re-election victory.

Hundreds of supporters gathered in Sao Paulo to celebrate Lula's landslide re-election victory.

Now Lula is looking for a broad alliance with the other parties in congress. In particular, he would like to have the centrist party PMDB more closely involved with the government -- the influence of the Worker's Party (PT) would in turn be reduced. "Lula is heading for a government of the middle," says Kotscho.

Good news for Washington

Lula's re-election is good news for Washington: US President George W. Bush -- hated in Latin America more than any other world leader -- values Lula as a reliable negotiating partner. Relations between Brasilia and Washington are better than ever.

Brazil is seen as a bulwark against the regional allure of the Venezuelan President Hugo Chavez. Although Lula has avoided an open confrontation with the Venezuelan, Chávez's tactics of embracing Brazil has not worked. What were initially good relations between the two heads of state have cooled off quite a bit. Lula is said to be "irritated" by Chávez, according to those close to the Brazilian president.

The Brazilian is seeking good contacts with all governments in the region. In the conflict over the nationalization of the gas industry in Bolivia, which particularly affects Brazil, the level-headed Lula avoided an escalation. "Some reactionaries would prefer to go to war against Bolivia," he said. Now the two governments have agreed to negotiations.

Yet in front of the Jobi Bar in Leblon there are still signs of coming storms. On Election Day some pensioners gathered near the bar wearing T-shirts with the slogan "Lula No!" The bar's owner had to place a guard at the entrance to protect his left-wing regulars from being attacked.

The competition is happy to take advantage of the dispute over the bitten finger. The Escondidinho bar, just a hundred meters away from Jobi, is offering "little fingers à la vinaigrette." According to the owner, the dish of sausages in vinegar is "selling like hot cakes."

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