MercoPress. South Atlantic News Agency

Lula da Silva confident of US recovery but cautious about protectionism

Pte. Lula and Pte .Obama will meet on Saturday

Brazilian President Lula da Silva said on Friday that counteracting the global credit crunch and preventing a wave of protectionism will be high on the agenda when he meets US President Barack Obama on Saturday.

Speaking to reporters before embarking for Washington, Lula da Silva said that he is hopeful about the Obama administration's ability to lead the United States out of the worst economic crisis since the Great Depression.

“The biggest problem right now is the absence of credit. Money has disappeared. So what I want to discuss with President Obama, in a frank way, is what to do to re-establish credit around the world,” he said, without providing further details.

Lula da Silva who on Saturday will become the first Latin American leader to meet Obama at the White House, said the US was to blame for causing what he called the “biggest financial disaster we've ever seen.”

But he stressed that he was confident that the United States would bounce back from the crisis if it moved swiftly to overhaul its financial system so that it serves society as a whole and not just a select group of Wall Street financiers.

“We have help to root the United States” Lula da Silva said. ”I'm very optimistic about the possibility of the US finding a way out (of the crisis) soon.“

Lula da Silva said he would urge Obama to push for a completion of the Doha Round of global trade talks and to resist the temptation to resort to protectionist measures.

”We need to discuss the Doha Round. We need to make it clear that protectionism can offer some short-term relief, but in the medium term, it can cause a disaster in the world economy“ he said. ”Brazil is against the return of protectionism.”

As a major exporter of farm goods and natural resources such as iron ore, Brazil is a fierce advocate of tearing down trade barriers in rich nations as a means of generating prosperity in the developing world.

“I’m also very optimistic about the coming G20 summit in London next April 2”, said the Brazilian president who expects to talk to the leaders of the world’s main economies.

“In London I will be talking to (Chinese president) Hu Jintao and (India Prime Minister) Singh, and all this is possible because of G-20 and that is why I’m optimistic and a strong believer in a way out”.

Lula da Silva said that with Obama and at G-20 he will defend the idea that “protectionism can help momentarily but in the mid term is disastrous for the local economy and the world”.

He also underlined that “rich countries must learn to look after their banks; they must have strong regulations so we can be sure that the financial system is linked and working for the production sector, the real economy”.