FEATURE: Richer, more powerful Brazil to decide life after Lula

By Diana Renee Sep 29, 2010, 13:25 GMT

Rio de Janeiro - The winner of Sunday's presidential election in Brazil is set to inherit a country that is richer and more powerful than the one that outgoing President Luiz Inacio Lula da Silva took on eight years ago.

In January 2003, when the former steel worker Lula took office as the country's first president of working-class origin, many were worried about his leftist background. The months before Lula's election win were marked by speculative attacks on the Brazilian real.

Soon, however, the markets were reassured. He eventually became a global statesman and a natural leader of developing countries around the world, without losing his grip on the economy.

As the country chooses among nine candidates, the markets are ready to embrace his designated successor Dilma Rousseff, the candidate of the Workers' Party (PT) founded by Lula, as the first female president in the country's history.

But some still doubt. Some regard Rousseff - who once trained as a guerrilla fighter - as standing further to the left than Lula, and her main rival, Jose Serra, and his Party of Brazilian Social Democracy (PSDB) have warned voters of the dangers.

One of their campaign adverts shows Lula trying to stop fierce- looking dogs.

'Lula did good things for the country. The best of them was not to let the PT lead his government. Lula managed to stop them. But what about Dilma? Will she be strong enough to control the PT?' the ad says.

Rousseff thinks she can.

'In 2002 we defeated the fear that some sought to get into the election to prevent Lula from being elected. We will again defeat that fear,' Rousseff countered this week.

When Lula took office, Brazil was still taking early steps on the road to becoming a solid economy. It had high unemployment rates and a vulnerability derived from its public debt, which stood at close to 60 per cent of GDP at the time.

But things changed almost the moment Lula took office. Fears of a turn towards socialism subsided as he announced not just his first social programme in favour of the country's poor, Zero Hunger, but also a tough fiscal stance which tightened the strict economic principles of his predecessor.

After that, Lula's Brazil rode a strong wave in the global economy. He attracted investment and strengthened the real. And he accumulated foreign currency reserves, which now stand at 270 billion dollars, an amount that far outweighs the country's foreign debt of 235 billion dollars.

From Lula's second year in office, Brazil had again found the path of economic growth. Growth stayed at around 3.5 per cent per year on average until last year, when the South American giant faced some stagnation from the global economic downturn.

The government's countercyclical measures, including tax cuts on products like cars and the provision of cheap public loans to keep up economic activity, meant Brazil was among the first countries to get over the crisis. Impressive growth above 7 per cent is expected this year.

Credit expansion for consumers and minimum-wage increases above the annual rate of inflation, together with financial aid for some 48 million poor through the social programme Bolsa Familia (Family Grant), gave rise to a new legion of consumers, which experts estimate at 29 million people in the populaton of nearly 200 million. They boosted demand at home, making up for lagging export demand.

While challenges remain, Brazil's outlook is very good as a new president prepares to take office. International studies point out that Brazil will be the world's fifth-largest economy by 2014, up from its current position of eighth.

Lula's is definitely a hard act to follow, whoever his successor.

Rousseff has stressed that she aspires to improve health, education and security so that in the future 'the whole of Brazil is made up of a strong consumer middle class.' Serra, in turn, promises to fight corruption and to ensure a more efficient use of state resources for the benefit of the people.

Lula's economic and social successes have also put Brazil in a privileged situation in the international political sphere.

The South American giant is among the leaders of the Group of 20 (G20), which brings together industrial and emerging economies. It was a top source of policy suggestions to overcome the recent global crisis, and it remains a key player in the Doha Round of talks at the World Trade Organization (WTO).

It remains to be seen whether Brazil's next president can rise beyond the title of 'Lula's successor' and make a name for him or herself in the global stage.