Brazilian president Luiz Inácio Lula da Silva is hard to track. When he first took office five years ago, the former leftist firebrand took a sudden right and threw almost everyone off the rails. The onetime sworn enemy of "savage capitalism" turned into a paladin of the free markets, fighting inflation, honoring national debts, and generally toeing the line of capitalist democracy, drawing applause along the way from the boardrooms to the bourses (and Bronx cheers from the hidebound left). "Bankers love Lula," one Latin American investment strategist once told me. Finally, it seemed, here was a Latin leader who could stand up to Hugo Chávez, the Venezuelan Comandante, who surged into the headlines on a geyser of oil and bombast.
Jump cut to present. Nearly a year into his second term, Lula looks to be careening off course again. Parsimony is verging on populism as his government has pumped up official spending (to twice the rate of growth of gdp) and lavished consumers with credit. Brasilia is flush with tax monies which might lead another leader to give the 183 million Brazilians who already shoulder one of the highest tax burdens in the world (one of every three reals goes to government) a break. Not Lula II, who has deployed congressional allies to battle for the renewal of a controversial check tax, the cpmf, worth a cool $23 billion.
Lula also has upped the ante politically, and in a way that gives democratic minded Brazilians heartburn. He moved heaven and earth, and a fair amount of pork, to save the skin of a key congressional ally - the hapless senate speaker, Renan Calheiros, who was caught sending wads of money in child support to a former paramour by way a lobbyist employed by a big government contractor. (Calheiros still faces three other charges of abusing office.) His government has proposed, by turn, setting up an official committee to keep watch over the national media, another to assure that filmmakers receiving federal funds have appropriately "socially relevant" projects, and a state run television network presumably to counterbalance the inconvenient opinions of independent broacasters.
Swimming in money, spending like crazy, trying to manage the free press... Sound familiar? Often such tactics are those of a government in a society sharply divided or a nation where an economic boom is really a bubble. Not Brazil. On the contrary, Lula has never been more popular and Latin America's biggest market is on a roll, with foreign investment pouring in at the clip of $60 billion. Hard currency reserves are overflowing and Brazil's stock market has surged 45 percent in value just this year. Better still the state run energy giant, Petrobras, announced the discovery of a vast new cache of oil off the shores of Rio de Janeiro, the Tupi fields, containing between five and eight billion barrels of precious light crude, which if proven, would put Brazil into the big leagues of world oil production and second in Latin America - behind only Venezuela.
That find alone would seem enough to hush up Chávez and give Brazil the edge in the undeclared race to lead in Latin America. But Lula has been oddly demure. Again and again, he has gone out of his way to indulge Chávez, while at the same time keeping counsel with governments from Washington to Brussels. While much of Latin America applauded (if discreetly) the Spanish King Juan Carlos - who told the looselipped Comandante to "shut up" at the recent meeting of Iberian and American states - the Brazilian president rushed to his defense. "You can criticize Chávez for a lot of things, invent anything you want against Chávez, but not for a lack of democracy in Venezuela," he said.
Such stirring support for an impolitic neighbor may well have been heartfelt, merely tactical, or possibly an odd mixture of the two. But playing both sides against the middle sends out confusing signals to allies and rivals alike. Given half a choice, Latin Americans would probably settle for a leader instead of a contortionist.
