Candidate pledges new directions for Brazil's economy

Brazilians voted overwhelmingly against US-backed free-market reforms and for a new direction for South America's largest economy, the winner of the first round of Brazil's presidential elections said on Monday.

"Seventy-six percent of the electorate voted against the current model of economic dependency," Luiz Inacio Lula da Silva said at a news conference.

Silva, a former union boss, got 46.4 percent of Sunday's vote but fell shy of the absolute majority he needed for a first-ballot win. He now goes to a runoff on October 27 against government-backed candidate Jose Serra, who won 23.2 percent.

Two other left-of-centre candidates were eliminated: former Rio de Janeiro state Gov. Anthony Garotinho, who got 17.9 percent of the vote, and former Fiannce Minister Ciro Gomes, who had 12 percent.

Despite falling short of victory, Silva said voters had issued a clear mandate for change after eight years of market reforms under President Fernando Henrique Cardoso. A former sociology professor, Cardoso eliminated four-digit inflation but left the country's economy stagnant.

The prospect of a Silva victory alarmed investors, who speculated that he might lead Brazil to default on about $230 billion in public debt - even though he pledged not to. Brazil's currency tumbled more than 30 percent as Silva appeared close to winning, which raised the cost of imports and put pressure on inflation.

"The market has been pernicious for the economies of emerging countries," Silva said. "The market is very nervous, and we want to calm the market."

Silva criticized the "greed" of quick-hit investors who fed off Brazilian markets but didn't invest in productive industries. The government raised interest rates as high as 45 percent to attract foreign capital during a 1999 currency crisis.

"Against the greed of those who want to make easy money, we want to offer the chance to make money by producing - producing food, cars, clothes and other goods," Silva said. "It's production that determines the greatness of a country."

While the world anxiously awaits a sign of who might run economic policy in a Silva government, the candidate said other posts wouldn't take a back seat to finance.

"The economic area will not be an all-powerful god," he said. "We won't subordinate the government's policy only to the economy or we'll spend four years doing nothing. We want to make profound changes in Brazil, especially on social questions."