Washington Post Foreign Service
October 29, 2002; P. A13

Brazil's President-Elect Pledges To Fight Poverty but Pay Debts

By Scott Wilson

SAO PAULO, Brazil, Oct. 28 -- Addressing domestic hopes and international fears, Brazil's president-elect Luiz Inacio Lula da Silva today outlined a populist
program, designed to spur employment and end hunger in this vast country, while at the same time promising to honor Brazil's foreign debt obligations.

Lula, as the socialist former trade union leader is known, delivered his first substantive remarks since his landslide victory Sunday as foreign governments and
international lending institutions waited expectantly for signs of what Brazil's first elected leftist president will mean for the largest economy and the most populous
nation in South America.

In a short speech that took some of the rough edges off his campaign rhetoric, Lula asserted that Brazilians "chose an alternative project" by electing him president
and declared that this "is the beginning of a historic moment." Ending hunger in a country where an estimated 40 million people live in poverty will be his chief
concern, he said, and he suggested that he will consider his term a success if every Brazilian can afford three meals a day at the end of it.

At the same time, Lula signaled that most change will be undertaken within Brazil. That was seen as a bid to calm foreign markets that have punished Brazil's national
currency and bond values in anticipation of his election. He has called those losses, which have significantly complicated Brazil's efforts to service a crushing $260
billion public debt, a form of "economic terrorism."

Brazil's currency and bonds dipped in value even as Lula pledged to operate within the financial framework he inherits from President Fernando Henrique Cardoso,
a subscriber to the U.S.-advocated policies of free trade, fiscal restraint and privatization that have so far failed to alleviate poverty in Brazil. He promised to keep
inflation low, to abide by the terms of a recent $30 billion International Monetary Fund loan and to pay Brazil's foreign debt despite past threats to default.

But he also called on international lending agencies to reexamine their goals, which many Latin Americans who have failed to prosper over the past decade of
free-market reforms have come to view as a reflection of U.S. economic interests. Tapping into that backlash, Lula, 57, won Sunday with 61 percent of the vote --
and the widest margin in Brazilian history -- largely on his pledge to take the country in a different economic direction.

"A majority voted for a new economic model of growth and development, but they know that this cannot be done by magic," Lula said. "Brazil will do its part to
overcome its crisis. The International Monetary Fund, the Inter-American Development Bank and the World Bank should also reestablish their goals. And the rich
countries should remove barriers that damage our exports."

Lula's reassuring tone marked the beginning of an effort to transform a populist campaign into a coherent plan for governing this nation of 170 million people. He is
scheduled to meet Tuesday with Cardoso, after which the two will announce a transition commission designed to ensure a seamless handover when Lula begins his
four-year term on Jan. 1, his advisers said.

Lula spent the early part of his speech hailing his victory as a sign of Brazil's democratic health 17 years after the military dictatorship, which he ardently opposed as
leader of the leftist Workers' Party, gave way to free elections. His centrist rival, former health minister Jose Serra, offered congratulations on election night and said
he intends to meet with Lula at the president-elect's request after a week of rest.

Much of Latin America's left, whose clout as a political force has been fading in recent years, celebrated the election of a committed socialist. Lula's beard may have
grayed since his days as head of the 100,000-member metalworkers union in this industrial city, but his campaign rhetoric still generated much of its heat by opposing
U.S. policy in this part of the world.

Cuban President Fidel Castro called to congratulate a man he has called "my friend," and Venezuela's embattled leader, President Hugo Chavez, said Lula would
help the left construct "an axis of good" in Latin America. President Bush also called Lula this afternoon to offer congratulations.

"We're going to deal with him up front as a legitimately elected democratic leader," the State Department spokesman, Richard Boucher, said in Washington. "We're
going to talk to him about his ideas. We're going to talk to him about our ideas. But above all, we're going to deal with him on the basis of our shared interests and
concern in combating threats to the hemisphere, promoting good government, extending economic opportunity in the hemisphere."

For his part, Lula appeared to back away from some of the campaign rhetoric that was most troublesome to Washington.

Referring to the Free Trade Area of the Americas, a hemisphere-wide free-trade zone that is the Bush administration's top initiative in the region, Lula said he will
work to come up with a fair accord. Lula -- and many of Brazil's businessmen -- oppose the agreement because, he contended throughout the campaign, the United
States has taken steps away from free trade by increasing steel tariffs and agricultural subsidies at the expense of Brazilian exports.