MercoPress. South Atlantic News Agency

Lula accused of having a “pact with the devil”

Brazilian vice-president and Defence Minister Jose Alencar accused President Lula da Silva of having signed a “pact with the devil” because of his insistence with the orthodox economic policies of former president Fernando Cardoso.

During a debate organized by newspaper Folha de Sao Paulo, Alencar concentrated his criticisms in the policy of high interest rates (19,5% the basic Central Bank rate) to keep inflation under control.

Mr. Alencar said that Brazilian rates are on average ten times higher than in other countries and even if they were only double, "the basic interest rate is inefficient containing public utilities rates hikes and the increase in oil derivates".

The vice-president recalled that he has always been critical of restrictive monetary policies such as the one adopted by former president Cardoso who ruled from 1995 to2002, and "I have not given up that position". "I'm thankful to President Lula, but this does not mean I can't be faithful to my principles. My loyalty to the president and my principles is absolute" he emphasized arguing that both "are compatible".

When asked about the corruption and hush funds scandal that have rocked Brazilian politics and the ruling Workers Party, Mr. Alencar said he was convinced President Lula da Silva "ignored what was going on".

"All those stories about the monthly payments to Congress members were born in the Workers Party. Lula's administration was not informed. All those who are in touch with the president's agenda, are well aware he was not part of it or knew about it", underlined the vice president.

Mr. Alencar, 73, a self made textile millionaire belonging to the Liberal Party accepted the invitation to join former union leader Lula's presidential ticket which eventually won by a landslide in 2002.

However the Liberal Party was involved in the hush funds and corruption scandal and Mr. Alencar now belongs to the Municipal Renewal Party, a grouping started by a bishop from one of the strongest Pentecostal churches of Brazil.

The change of party was also interpreted as an attempt by Mr. Alencar to run for the presidency in 2006, but the vice-president definitively discarded the rumour, "I'm no candidate and not running for any office".