MercoPress. South Atlantic News Agency

Brazil: “Lula effect”

Government and opposition have closed ranks in condemning several international banks that are warning investors about a possible victory of Socialist Luis Inacio da Silva, “Lula”, in the coming Brazilian October presidential election to succeed president Fernando Cardoso.

The so called "Lula effect" last week had a devastating effect in the Stock Exchange and for the Brazilian currency after Dutch and Spanish banks plus US risk assessment agencies recommended their clients to limit their exposure in Brazil.

Brazilian Economy Minister Pedro Malán rejected the adverse comments and said "Brazil is a consolidated economy and therefore the coming elections must be analyzed as a natural process".

Luis Inacio da Silva, Lula, when asked by the Brazilian press said that the "assessments of these banks are done by adventurers. They are made public during the day to influence stock markets and later denied by the official comptrollers of financial systems".

Although President Cardoso made no official comment, an influential newspaper "O'Globo" quoted Mr. Cardoso saying he will not tolerate interferences fromfinancial institutions in the country's electoral process".

"These institutions must learn to respect democracy. In Brazil it's the people's vote that will decide what must be done and what is good for the country", apparently was Mr. Cardoso's reaction to the situation.

The latest polls indicate that Lula has a comfortable lead doubling his closest runner up, but those still undecided are a majority.

The ruling coalition candidate, Mr. José Serra, a close ally and hand picked by Mr. Cardoso has been unable so far to disturb Lula, and insistent political rumors indicate he might be replaced.

Meantime Lula, a former union leader, who considers himself a Socialist and has run several times for the presidency has changed his blue collar for Armani suits and has made it a point to be seen dining and meeting with the Brazilian business and farming community.