Lula bounces back from scandal to run for re-election

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The Independent US

Having rebounded from a political funding scandal that threatened to engulf his presidency, the Brazilian leader Luiz Inácio Lula da Silva has announced his intention to run for re-election - once the distraction of the World Cup has been put to one side.

Less than nine months ago, the man known universally as Lula appeared to be washed out, with his Workers' Party (PT) rocked by scandal and his own poll ratings plunging. There were doubts he would even contest October's forthcoming election.

But on Saturday Lula told his party convention: "I'm here to tell you I've accepted once again, the call to continue the struggle for the construction of a more fair and independent Brazil, where every Brazilian can have three meals a day, a job, education and health, and live in a more modern and humane country."

In truth it has been clear for the past three months or so that Lula would almost certainly be his party's candidate in the presidential election. A combination of continued steady economic growth, the scandal having run its course and divisions between his rivals had placed him in an increasingly strong position. Indeed, one recent poll gave him a 30-point advantage over his closest rival, former Sao Paulo state governor Geraldo Alckmin, of the centrist Brazilian Social Democratic Party (PSDB).

Lula says the conditions for most of Brazil's poor have improved since he took office in January 2003, following a landslide election victory that boosted the spirits of leftists across Latin America. Programmes such as "Bolsa Familia", which gives poor families monthly stipends to keep children in school and in after-school activities instead of going to work, have helped cut the numbers of those living in poverty.

One poverty-tracking index maintained by the Fundacao Getulio Vargas (FGV) business school, suggests the percentage of the population afflicted by poverty fell from 27.3 in 2003 to just over 25 in 2004. Last week new figures showed the unemployment rate in the country's six largest metropolitan areas again dropped, to 10.2 per cent from 10.4 per cent.

But the challenges still facing Lula remain immense - something he himself acknowledged. In many ways Brazil is a divided country with an industrialised south and an undeveloped, much poorer north.

The inequality between the richest and the poorest remains startling. "I know there's still a lot to be done to reduce poverty and social inequality. But we are on the right track," said the former trade union leader.

In the past year or so Lula has been eclipsed on the international stage by the Venezuelan President Hugo Chavez, a new hero for the left who has used much of his country's oil wealth to pay for health clinics, schools and food subsidies for the poor. He, too, has achieved real results with the poverty rate falling from around 50 per cent when he took office in 1999 to less than 44 per cent at the end of last year. But it is probably his outspoken opposition to George Bush and his readiness to offer an alternative economic vision to the "Washington consensus" that has won him most supporters.

In contrast, for all his populist campaign promises, Lula's presidency has been one of moderation and fiscal conservatism, keeping interest rates high and domestic growth slow to pay off debts and control inflation. While the average growth rate of 2.6 per cent has been too slow for some critics, he has avoided any boom and bust and paid off the remainder of a $30bn debt to the International Monetary Fund ahead of schedule last December. Growth is expected to rise to 3.6 per cent this year.

While Lula has already been travelling the country in campaign mode, officials say the real cut and thrust will begin at the end of July when the World Cup tournament ends.

Brazil under Lula

* Percentage of population living in poverty fell from 27.3 in 2003 to just more than 25 in 2004

* Interest rates of about 17.5 per cent have made annual growth slow. This year predicted to be 3.6 per cent. Unemployment in biggest cities fell to 10.2 per cent this week

* While Brazil remains one of the most economically inequal countries in the world, figures show that inequality is falling. In 2004, the per capita income of the poorest half of the population rose by 14 per cent.

* Despite election promises, destruction of the rainforest continues. In 12 months from July 2003, an estimated 10,500 square miles was cut down, the second largest annual amount on record. That amount was reduced the following year but was still 7,300 square miles.