MercoPress. South Atlantic News Agency

Lula keeps everybody guessing

Brazil's elected president Luiz Inácio Lula da Silva who will be visiting next week Argentina and Chile to underline his future government commitment to Mercosur still has to announce what is considered the main political issue: who will fill the key posts in the incoming administration.

Even before Mr Lula da Silva was elected last month, world markets had been waiting the former union leader to announce his government team and in this way help appease fears that one of the world's largest economies could end mismanaged by a group of amateurs. However so far he has won the confidence of previously sceptical foreign investors by emphasising a commitment to orthodox fiscal and monetary policies.

The appointment of AntÃÂÂ'nio Palocci to head the transition team was applauded by financial markets. Mr Palocci proved a fiscal hawk as mayor of the southern city of Ribeiro Preto and is expected to take over either the finance or planning ministry. He's described as having the necessary "political ability and good judgment".

The International Monetary Fund, World Bank and other multilateral institutions have also given Mr Lula da Silva the benefit of the doubt, praising his combination of innovative social projects with budgetary discipline. In a recent visit World Bank president James Wolfensohn pledged billions of dollars in additional aid for coming years. President Fernando Henrique Cardoso has even offered to submit Central Bank nominations to Congress so they would be in place by the time Mr Lula da Silva took office.

However in spite of the positive atmosphere, delays in naming appointees have caused some concern, aggravated by some negative signals. Last week, José Dirceu, the powerful party president, dashed investors' hopes that Arminio Fraga, the darling of international financial markets, might stay on as Central Bank governor. Another economic adviser raised eyebrows by saying the next central banker would require more "heart" and fewer "econometric models".

Another issue that caused concern was Mr. Lula da Silva request to have the taking office day delayed for at least a week. But President Cardoso was adamant, "not one day less, or one day beyond January 1st. will I remain in the Planalto".

The one certainty is that the government will be broad. Workers' Party mayors, governors and academics are likely to occupy some top posts, but outsiders will also play a key role. Few observers expect Mr Lula da Silva to rule with a gang of aye-saying cohorts. In recent weeks he has held marathon talks with leaders of all political stripes and struck a deal in Congress with the large, centrist PMBD party. Besides, Mr. Lula da Silva is known to have offered cabinet posts to outstanding, but controversial, Brazilian politicians such as former president Itamar Franco and former governor of Rio do Janeiro and Rio Grande do Sul, Leonel Brizola.

After his visit to Argentina and Chile, Mr. Lula da Silva has been invited to participate in the Mercosur presidential summit in Brazil before flying to meet President George Bush in Washington.