US fears a new "axis of evil"

Observations on Brazil

He may be the leader of the Workers' Party and a former union leader, but Luis Inacio Lula da Silva (Lula), who is almost certain to become the next president of Brazil, has his business supporters, too. "We need a leader who can unite Brazil around national interests," said Eugenio Staub, head of a large electronics firm and a close friend of Jose Serra, Lula's closest opponent and the candidate of the ruling PSDB party. "Only Lula can do this." Like other business people, Staub is alarmed by the way multinational capital is taking over the economy.

Lula is a three-time loser and many thought his party had blundered by insisting on him as its candidate again. But his impending election on 27 October - he got 46 per cent of the vote against Serra's 23 per cent in the first round on 6 October - reflects a change in the political mood of Latin America.

For more than a decade, most Latin American countries dutifully followed the IMF recipe, dismantling trade barriers, privatising state companies and reducing state spending. Closer integration into the world market, it was claimed, would attract huge inflows of foreign capital, which would finance national development. No one was more enthusiastic than the late convert, the outgoing Brazilian president, Fernando Henrique Cardoso, once a left-leaning sociologist. He invented a term - neobobos (neofools) - to describe those who refused to accept the benefits of globalisation.

Today the IMF model - or neoliberalism - is widely seen to have failed. Unemployment for Latin America as a whole has risen to a record 9 per cent. Foreign investment and foreign capital flows, which for a few years soared, have dwindled almost to nothing and, with huge foreign debts to service, Latin America will be a net exporter of capital in 2002 for the fourth year running. The crisis has already bankrupted Argentina. Brazil needs $1bn a month to service its foreign obligations, with more heavy repayments due in 2003.

Lula offers a real alternative. The first time I met him in the Seventies, during the days of military dictatorship, he was a young labour leader, standing on a table in the pouring rain in the Vila Euclides football stadium, on the outskirts of Sao Paulo, trying to make himself heard to 80,000 striking engineering workers. Since then, the Workers' Party has established itself as a national political force, winning mayoralties and state governorships.

Lula proposes not only to tackle poverty - in a country where 50 million people live below the poverty line - but also to work closely with Brazil's South American neighbours. His first foreign trip, he says, will be to Buenos Aires. His party clearly believes that the only way to confront Washington in the negotiations over the huge free trade area that the US plans for the whole of the Americas is to strengthen the regional trade bloc, Mercosur.

Lula's victory would be the most important for the left in Latin America since the election of Salvador Allende in Chile in the Seventies. It has not been well received by the fantasists who seem to have the ear of the US president. In the Washington Times, Constantine Mendes, an aide to the National Security Council in the Reagan administration, wrote in August of a "new axis of evil", made up of Fidel Castro's Cuba, Hugo Chavez's Venezuela and Lula's Brazil. David T Pyne, an adviser to the US army, has warned that a Lula victory would increase the chances of "a successful takeover of Colombia by the Communist Farc guerrillas" with "as many as 300 million people falling under the control of anti-American dictatorships".

Cutting the Wire: the story of the landless movement in Brazil by Sue Branford and Jan Rocha is published by Latin America Bureau (£14.99)