[A-List] Brazil: reinvigorating Mercosur

["Michael Keaney" <michael.keaney@xxxxxx>]

Lula tour rallies regional support
By Mark Mulligan in Santiago
Financial Times: December 4 2002

Luiz Inácio Lula da Silva, (pictured)  Brazil's president-elect, arrived in
Chile on Tuesday as part of a whistle-stop tour aimed at rallying support
for a regional solution to South America's economic crises.

He reiterated calls for more political and economic integration of Mercosur,
the southern cone trade bloc whose objectives have been undermined in recent
years by the Brazilian devaluation and the resulting economic collapse in
Argentina and Uruguay.

His visit, which followed a 24-hour stay in Argentina, was also seen as part
of a credibility-building exercise for Mr Lula da Silva, whose leftwing
background caused panic in Brazilian financial markets ahead of his election
in October.

However, he has successfully cultivated a more moderate image, close to that
of Ricardo Lagos, his Chilean counterpart and a socialist who has won
international credibility with a "third way" policy mix of social reform and
fiscal prudence.

Mr Lula da Silva will fly to Washington next week, where trade issues and
the regional debt crisis will be addressed during talks with President
George W. Bushand the International Monetary Fund.

Chilean government officials said on Tuesday Mr Lula da Silva, who is
commonly referred to as Lula, will have an increasingly important role as a
regional statesman, given Brazil's economic dominance in South America and
Argentina's distraction with its domestic woes and next year's presidential
elections.

"Lula has so far shown that he deserves the confidence of the world powers,"
said one official. "Now it's up to them to respond."

The Chilean visit was also symbolic because of the Chile's reluctance to
become a full member of Mercosur, and its preference for bilateral deals
with the world's main economic powers.

Chile earlier this year signed an accord with the European Union, and is
currently in the final stages of negotiating a deal with the US, which is
likely to become a template for a broader agreement extending from Alaska to
Tierra de Fuego.