Brazil's turn to the left.

Byline: The Register-Guard

The man everyone calls "Lula" is not really the first leftist to be elected president of Brazil. Luiz Inacio Lula da Silva is, however, the first to retain more than vestiges of leftist ideology by the date of his election victory. That alone shows that Brazil has moved beyond the ideology of the Cold War and its aftermath. The United States, in its dealings with Brazil and other Latin American nations, must prepare to do the same.

Lula, a charismatic trade union leader, won a landslide victory in last week's presidential runoff election. His Workers Party will lead a leftist coalition in the lower chamber of Congress, opening the possibility that Brazil will see dramatic shifts in policies and priorities. Lula will succeed President Fernando Henrique Cardoso, a socialist who came to power as head of a center-right coalition that proved impervious to reform and obedient to foreign financial interests.

Lula's win reflects Brazilians' frustrations with the standard prescription for Latin American economic development offered by international financial institutions and American administrations of both parties. Foreign investment and loans are the primary ingredients of this prescription. To attract foreign capital, Brazil has been advised to privatize government-owned industries, reduce tax rates and cut public spending. When the interest on loans comes due, or when a disturbance of any sort causes foreign investors to withdraw, the advice takes the form of a command.

The prescription has proved successful in a few cases, notably Chile, but has failed alarmingly elsewhere - most dramatically in Argentina, where the economy has contracted 15 percent this year and the currency has lost 30 percent of its value. Brazil has avoided an Argentine-style meltdown and its once-legendary inflation has been tamed, but poverty, crime and corruption remain widespread.

Lula promises to double the minimum wage, promote the cause of landless peasants and expand education, health and welfare programs. In this respect, he resembles another populist: Venezuelan President Hugo Chavez, who currently runs a close second to Fidel Castro as the Bush administration's least favorite Latin American leader. In Washington, the fear is that Lula's victory in Brazil - by far the region's biggest country, with the world's ninth-largest economy - is part of an anti-U.S. reaction that may soon spread. Ecuador, for instance, may elect a leftist president next month.

Yet Lula hasn't said the sorts of things that make international lenders and investors nervous - he hasn't threatened to default on Brazil's foreign debt, or to nationalize industries. He appears committed to free trade, though on terms more favorable to Brazilian producers of such commodities as coffee and citrus. He has surrounded himself with advisers of varied political orientation, and his party has shown itself capable of clean and effective government at the municipal and state level.

In electing Lula, Brazilians have indicated a desire to create their own model for national development. The United States should respect their right to do that, and resist the temptation to respond to Lula's victory with policies designed to prove that leftist governments invariably cause political instability, capital flight, economic distress and more poverty. Success for Lula could make his leadership an example for other Latin American countries to follow - but that's nothing the United States need fear in the post-Cold War era. Brazil's long-term stability and prosperity depend on its ability to successfully address the problems that Lula has made a priority, and the rest of the world should wish him luck.