SECTION: NEWS; Pg. 23A

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HEADLINE: Leftist has the lead for Brazil's presidency;
Lula may challenge U.S. on trade, Cuba policy, drug-fighting efforts

BYLINE: KEVIN G. HALL Knight Ridder News Service

BODY:
Rio de Janeiro, Brazil -- Brazilians appear set to elect outspoken leftist Luiz Inacio Lula da Silva as president Oct. 6, which could end a decade of warm relations with the United States and set the stage for foreign policy battles with Washington over trade, Cuba and U.S. anti-drug efforts in Colombia.

In his fourth consecutive bid for president, Lula, 56, holds a commanding lead in opinion polls. Last Sunday, a poll by Folha de Sao Paulo newspaper showed that Lula had a 25-point lead over his nearest rival and was closing in on a margin of victory wide enough to avoid a runoff.

If elected, Lula would lead the world's eighth-largest economy despite never having attended college. Many Brazilian politicians were lawyers or businessmen before entering politics; Lula worked in a metal factory and lost a finger in a machine press. The real, Brazil's currency, has lost more than a quarter of its value in recent months because investors fear that Lula will veer from the market reforms of the 1990s and default on Brazil's swelling debt. He vows to do neither. But investors wonder whether he can restrain the more radical elements of his party and fret that he hasn't even hinted about the makeup of his economic team.

The new poll plus stock market declines in the United States and Europe on Monday pushed the real to its lowest level since it became Brazil's currency in 1994. It fell almost 5%, trading at 3.57 to the dollar.

Counterculture remnants

Although Lula says he has moved politically from the far left toward the center, his rallies feel like a counterculture throwback. When he recently appeared at the Mangueira samba school in Rio de Janeiro, followers sold Karl Marx T-shirts and lapel pins with the face of revolutionary icon Ernesto "Che" Guevara.

Brazil and the U.S. have had close ties for a decade, but a Lula presidency could end that and also could have a broad impact on Latin America, where populists and leftists are making a comeback in many nations.

Left-leaning candidates have done well in recent elections in Peru, Bolivia and Chile. Two far-left candidates lead public opinion polls in Argentina, where presidential elections are to be held in March.

"I think Brazil is a very important role model in Latin America. Things that happen in Brazil have consequences in other countries," said Jose Scheinkman, a Princeton University professor and economic adviser to the campaign of Lula's rival Ciro Gomes.

New approach to Colombia

The clearest area where Lula may diverge with Washington is Colombia, Brazil's northern neighbor. The U.S. has given more than $1.3 billion in military aid to help the government fight Marxist rebels who themselves are financed through the illicit cocaine trade.

After several years of failed peace talks, Colombia's new president, Alvaro Uribe, is actively attacking the Revolutionary Armed Forces of Colombia, Latin America's largest guerrilla group. The Bush administration backs him, calling the guerrillas a band of terrorists.

While many Brazilians have been uncomfortable with U.S. involvement in Colombia, they have registered their concerns quietly. Not so Lula.

"We don't want a military solution in the region, and even less an internationalized solution," said Marco Aurelio Garcia, a longtime foreign policy adviser to Lula.

Lula appears to be positioning himself to get involved in seeking a resolution in Colombia.

"We don't want to interfere with Colombia's internal situation, but Lula as president would be open to helping them resolve their conflict," Garcia said.

As the elections near, Lula has become more open in his distaste for Washington policies. Addressing Brazilian military thinkers Sept. 13, he questioned Brazil's participation in nuclear non-proliferation treaties. He complained that nations such as the U.S. with nuclear arsenals refuse to destroy them while keeping developing nations in a position of weakness.

The former union leader and opponent of Brazil's past military dictatorships now openly courts the military and pitches nationalism, complaining that rich nations want to keep down the poor. In a recent interview with Argentine television, he accused Latin American leaders of being "servile" to Washington's interests.

Loss of independence

The anti-U.S. rhetoric strikes a chord with average Brazilians, who feel that a decade of following U.S.-style economic policies has failed to better their lot. They also think that following the United States' lead has meant a loss of independence.

"We must have relations that respect our nationalism," that favor Brazil's interests, said Acacio Almeida, a business administrator who was attending a Lula rally in Rio de Janeiro.

Lula also would challenge the four-decade U.S. policy of trying to isolate Cuban dictator Fidel Castro through a trade embargo. Lula has vacationed in Cuba and makes no secret of his admiration for the Cuban strongman.

Brazil trades with Cuba, but has stayed out of the U.S. conflict with that country. Lula has said he wants to boost trade with the communist island, and he is expected to be visibly more supportive of the Castro regime.

He is lukewarm about negotiations to create a Free Trade Area of the Americas by 2005. Those slow-moving talks, to create a free-trade zone from Canada's Yukon Territory to Argentina's Tierra del Fuego, began in 1994. Later this year, they enter a final stage, with the U.S. and Brazil co-chairing the last two years of talks.

Lula hasn't rejected the agreement. But he has said that recent decisions by President Bush to boost agriculture subsidies and restrict steel imports showed that the U.S. wasn't serious about free trade with Brazil.

LOAD-DATE: September 29, 2002