Can Brazil's Lula deliver on promises?

After his victory in Sunday's presidential vote, Lula now faces the difficult task of pushing through needed reforms.

Brazilian President Luiz Inácio Lula da Silva was reelected in a landslide Sunday, but that may be the easy part. His second term, say analysts, will be dominated by pressures to cut endemic corruption and inefficiency in his government, and to push through reforms needed to boost the country's sluggish economic growth.

Lula, as he's universally known, won the run-off election with a resounding 61 percent of the vote, defeating Geraldo Alckmin, the former governor of São Paulo state and the candidate of the centrist Brazilian Social Democratic Party.

The election, however, has divided Brazil along geographic and economic lines, analysts say. Lula won in the poorer north and Alckmin triumphed in the more prosperous south.

The former union leader won, experts say, because of his political history and a wide-reaching assistance program that pays mothers to keep their children in school. But he failed to pass important reforms during his first term in office or explain to voters why his Workers' Party (PT) and government have become so deeply embroiled in corruption scandals. His win Sunday gives him a solid mandate for the next four years, but it won't be sufficient to pass all the promised reforms, analysts say.

"They are going to try to go for the tax and fiscal reform, political reform and labor reform, and they will go back and look at social security [reform] again," says David Fleischer, the author of the weekly political journal Brazil Focus. "But it will be hard to do all four reforms, I'd say he may only get a third of it done."

Lula may face hostile Congress

Lula may struggle to get legislation through a potentially hostile Congress, Mr. Fleischer says. In concurrent congressional elections, the number of PT deputies in the 513-member House fell to 83 from 91.

Fleischer and other analysts say Lula's foes will try to wear him down with investigations into the scandals that plagued his first term. Lula has spent the last 18 months defending himself rather than governing constructively, and opposition leaders are threatening to pick up where they left off when Congress reconvenes on Feb. 1.

"Many investigations were set aside for the elections, and the opposition will want to pick them up and go deeper," says Joao Augusto de Castro Neves, a political scientist at the Brazilian Institute of Political Studies. "They don't want to work with him, so they will hit him as hard as they can; any small mistake will be seized upon. Everything indicates that the climate will be even more combative than before."

Reforms needed to boost sluggish economy

Social security, labor, and fiscal reform will be vital if Brazil is to grow more quickly, experts say. Brazil's GDP grew an average of 2.6 percent annually under Lula, almost half Latin America's average and well behind rival developing nations China, India, and Korea.

It also has the highest tax burden and highest interest rates in the region, and a budget that officials have acknowledged will need to be slashed.

"Everyone agrees, I think, on what needs to be done," says Helio Magalhaes, chairman of the board at the American Chamber of Commerce in Brazil. "The tax burden needs to be reduced, government spending has to come down, and social security needs to be reformed because it generates such a huge deficit. And the government needs to invest in infrastructure to create the conditions for long-term investment. From a business point of view, those are the fundamental things."

Lula's reelection is good for Brazil's ties with allies near and far, according to foreign policy experts. In addition to promoting closer links with China, Asia, and the Middle East, Lula maintained cordial relations with President Bush and top European leaders during his first term and he was a key bridge for them in the region.

Lula leads the so-called "soft left" in South America – Argentina, Uruguay, Chile – and also has the ear of the region's most radical leader, Venezuela's Hugo Chávez, experts say.

"The United States sees Lula as a person who can guarantee stability in the region, someone who can talk to Chávez and maybe even contain him," says Nelson Jobim, a professor of international relations at Univercidade, a private university in Rio de Janeiro. "That will continue."

Other experts say Lula will continue to lead developing nations in international trade talks but with negotiations over the Free Trade Area of the Americas having broken down definitively, Lula may turn his attention to integrating the economies and infrastructure of his neighbors.

"The FTAA is dead, dead, dead," says Riordan Roett, director of the Latin American studies program at Johns Hopkins University. Brazil will keep pushing developing countries on trade and regional integration, but he says, "I don't see any big changes."

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