From Prison to the Brink of Power

Djalma Bom remembers the radical leader who got his start outside the doors of this city’s factories, making impassioned speeches about capitalism, class warfare and Brazil’s socialist future. A generation ago, Bom shared time in prison with him.

Today, the legend of that man, known simply as Lula, looms large over Brazil. As the country prepared for elections today, Luiz Inacio Lula da Silva was the overwhelming favorite to become president and bring his leftist Workers’ Party to power, a fact that filled millions of Brazilians with hope--and millions with dread.

“Lula has the profound sense of compassion and justice that Che [Guevara] had,” said Bom, comparing Lula to Latin America’s most famous guerrilla fighter.

“The country is about to be subjected to political laboratory experiments,” countered Ariosto Texeira, a columnist for O Estado de Sao Paulo newspaper.

According to all polls here, Lula had double the support of his nearest competitor. He might even win an outright majority and avoid a runoff--a prospect that has sent Brazil’s currency and its financial markets tumbling.

If Lula wins, it will be in large measure because the election has become a referendum on Brazil’s decade-long embrace of free trade and globalization. As the consummate outsider of the Brazilian political scene, he rode a wave of popular discontent with corruption and 8% unemployment.

Although he has tried to move to the political center, Lula would likely make major shifts in this country’s relations with the United States if he won. He has accused the U.S. of trying to “annex” his nation with unfair trade policies and says the Bush administration has shut off U.S. markets to Brazilian agricultural exports.

“The United States has been intransigent in the defense of its interests,” Lula told foreign journalists in Sao Paulo last week. “We Brazilians also have to be intransigent in defense of our own interests.”

With ruling-party candidate Jose Serra running a distant second--some polls showed him trailing by as much as 26 percentage points--a host of Brazilian commentators and business leaders has begun preparing for what had been unthinkable just a year ago: a Lula presidency.

Roberto Setubal, president of Banco Itau, Brazil’s largest bank, tried to reassure investors in Washington on Tuesday. “Lula’s victory is not a revolution,” he said. “He’s going to have to make alliances with others, and he knows it.”

Setubal, like many here, blamed the ruling party’s poor showing in the polls on Serra’s failings--the former health minister has a reputation as an unfeeling technocrat--rather than on a rejection of Brazil’s current economic “model.”

“Lula is an honest man,” Setubal said. “Lula speaks from the heart. Serra also is a good man, and he is honest. But he doesn’t speak to people’s hearts.”

Although some business leaders, such as Setubal, don’t expect a President Lula to bring drastic changes, many Wall Street analysts believe that a Workers’ Party administration would toss out the budget targets set in a $30-billion loan deal between the International Monetary Fund and the outgoing government of Fernando Henrique Cardoso.

Those analysts also think that Lula would try to make good on promised reforms in health and education--forcing the government to default on Brazil’s $260-billion debt. (Lula has given mixed signals about whether he would abide by the IMF agreement, but he has said Brazil will not default on the debt.)

On Sept. 24, when a poll put Lula within a few percentage points of an outright majority, the Sao Paulo stock market plummeted. So did Brazil’s currency, the real, which has continued to fall. In June, $1 bought 2.5 reals; at one point last week, it bought 3.8.

Although the real’s fall has, in effect, made most Brazilians significantly poorer in relation to the rest of the world, it has done little to affect Lula’s standing in the polls. Instead, the slide seems only to have confirmed a central theme in his campaign: that Brazil is being hurt by powerful outside forces, including the “speculators” of the world’s financial markets.

“A country the size of Brazil can’t be crying, watching television as the dollar goes up and the stock market falls,” Lula told the foreign press. “The stupidity of these speculators has no limit. Brazil will not go bankrupt.”

To his most loyal supporters, the devaluation is just another chapter in the Lula legend.

Brazil’s elite have always tried to bring Lula down, the supporters argue, recalling the military dictators who threw Lula the union leader into jail in the late 1970s, as well as the media barons at TV Globo network, who party militants believe conspired to sabotage his first campaign for president, in 1989.

“This time won’t be like before because the Brazilian people are informed now,” declared Fred Maia, a Workers’ Party activist who joined 100,000 people for a rally in Sao Paulo on Sept. 29. “Lula’s victory has become inevitable.”

Most observers agree that the political panorama of 2002 is completely different from the days when the Workers’ Party was mounting its first campaigns. The party is finding allies in places where it used to find enemies. Last month, Lula received a rousing ovation from military leaders gathered in Rio de Janeiro. Many top generals are angry that Cardoso cut their budgets; Lula promised that they will be well-funded.

And every day, it seemed, another leading capitalist jumped on Lula’s bandwagon. Fernando Gasparian, a Sao Paulo business leader, Cardoso ally and co-founder of the conservative ruling party, joined two weeks ago. “Lula is a statesman, he has grandeur and is well informed about Brazil’s problems,” Gasparian said.

To many in the political center, Lula is a more palatable alternative to the two other left and center-left candidates: Ciro Gomes, a mercurial former economy minister, and Anthony Garotinho, a former governor of Rio de Janeiro state.

David Fleischer, a political scientist at the University of Brasilia, said Lula has managed to pull off a political high-wire act: assuring moderate voters that he isn’t the “scary” radical of old, while convincing people hungry for change that an old radical is really the best man to break Brazil out of its crisis.

“People are unhappy about what’s happened these last eight years under Cardoso,” Fleischer said. Polls show that unemployment, corruption and crime are top concerns. Although many Brazilians blame Cardoso’s “neo-liberalism” for the country’s ills, they also fear a return to the hyperinflation that he brought under control.

Lula’s dance between the left and right, change and continuity, was evident in the last days of the campaign.

Last weekend, he met with top business leaders and repeated a campaign promise to promote domestic business. But two days later, Lula announced that, if elected, he would not reappoint Arminio Fraga Neto to head the Central Bank. Fraga Neto, one of the architects of Cardoso’s pro-business policies, is popular with the financial markets and the IMF.

“We are going to pick someone who loves Brazil and who, at the same time, understands the subtleties of the market,” Lula said. “But we also want someone who understands the subtleties of hunger, of unemployment.”

For most of these appearances, Lula wore a suit and tie, breaking a lifelong habit of jeans and rolled-up sleeves. The new look is among the many changes instituted by Lula’s campaign marketing specialist, Duda Mendonca, who also reportedly persuaded the candidate to have his teeth straightened.

Mendonca has crafted TV ads that recount the saga of Lula’s life, a story that begins in a small town in Brazil’s impoverished north, then moves to this industrial suburb of Sao Paulo, where Lula lost a finger in a workplace accident and became a union organizer.

That’s the Lula that Bom, a retired union activist, remembers. “He told the workers that if they stood in front of their machines with their arms crossed, they would change history,” Bom said, recalling the speech that preceded the first major strike here.

A few days later, 1,600 workers marched into an auto factory chanting, “Stop the machines! Cross your arms!” The strike failed, and Lula and Bom were jailed.

On Tuesday, about 10,000 people gathered in Sao Bernardo do Campo for the last public act of the campaign. Lula told the crowd:

“On Sunday, if God wills it, a metalworker will be president of the largest country in Latin America. Never again will anyone be able to think less of the Brazilian worker.”