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Cardoso vs. Lula: Two Brazilian presidents vie over who turned country around

By Juan Forero
Washington Post Foreign Service
Saturday, October 30, 2010; 7:46 PM

To millions of Brazilians, the man who deserves credit for the country's surging prosperity over the past eight years is President Luiz Inacio Lula da Silva, the charismatic former trade union leader who took office in 2003.

That sentiment, polls show, has benefited Dilma Rousseff, 62, Lula's former chief of staff, whom the president handpicked to succeed him. She calls Lula's two terms a "true revolution" and tells Brazilians that a vote for her in Sunday's run-off presidential election is a vote for continuity.

But one man has been waging a lonely battle to redirect credit for Brazil's remarkable rise: Fernando Henrique Cardoso, Lula's predecessor, who says his administration created the economic stability that allowed the country to eventually flourish.

"To be frank, the novelty, the change in terms of the orientation of the Brazilian society and government, was done in my period," Cardoso said in an interview last week. "Of course, Lula did a series of good things, too. The way he managed the recent international crisis was correct. But I started it."

Now 79, Cardoso is an intellectual and a prolific writer whose books include several on his two-term presidency, which ended in 2002. An academic who once dabbled with Marxism and spent years in exile during Brazil's military dictatorship, he is seen by political observers as a gentleman politician who has largely avoided public tussles since leaving office.

That impassivity changed after the ruling Workers Party began capitalizing on surveys showing that Brazilians viewed Lula far more positively than Cardoso, said David Fleisher, a political scientist at the University of Brasilia.

As a dull campaign wound down - Rousseff and opposition challenger Jose Serra are considered capable but colorless technocrats - the ruling party's strategy shifted to include sharp attacks on Cardoso that portrayed him as indifferent to working-class needs.

Serra, 68, who had served in Cardoso's cabinet and is from the same center-left Social Democratic Party, was cast as a relic of the past. Polls last week showed Rousseff with a double-digit lead ahead of the vote.

"It is very important to compare governments, and we are going to compare," Rousseff said in a radio spot this month. "So people can clearly see the Brazil of the past and the Brazil that is being born."

Cardoso under attack

Lula, who has accompanied Rousseff on the campaign trail, in one recent television ad called the Brazil of the past a "country of economic difficulty and unemployment."

"It's time to choose," Lula tells voters, "the Brazil that was going the wrong way or the Brazil that is going the right way - and that Dilma will continue."

In response, Cardoso has appeared publicly with Serra, written newspaper columns and granted interviews. Some of those who know the former president describe him as proud, at times self-righteous and now clearly irritated.

"I saw him in Madrid at a conference and he said, 'Do you believe what this guy is doing to my legacy?' " recalled Riordan Roett, a Brazil expert at Johns Hopkins University and author of "The New Brazil." "All you can do is smile. It's human nature, and it's politics."

Asserting that "Lula is criticizing me day and night," Cardoso said he decided to challenge the president to a debate earlier this month.

"Let's debate, looking eye to eye," Cardoso said. "I would like to hear from Lula, if he can say to me he created the stabilization in Brazil, or how he created the social programs." The president of Lula's party declined on his behalf.

What Cardoso did - first as finance minister in 1993 and later as president in 1995 - was to impose spending limits, shore up the banking system and improve tax collection. Brazil's biggest problem until then had been hyperinflation, which had reached nearly 5,000 percent a year before Cardoso implemented the so-called Real Plan in 1993.

The belt-tightening, along with moves to peg the currency to the dollar and reduce debt, quickly solved what had flummoxed governments over the years. Inflation fell, foreign investment soared, and so did company profits. The economy rebounded.

"Without Cardoso, Lula would have never had the success that he has had," said Fergus McCormick, who analyzes Brazil's economy for the DBRS credit rating agency in New York. Taming inflation, McCormick said, permitted Brazil to grow.

"Without stable prices, it's impossible to look forward," he said. "It's impossible for investors to plan."

Lula's winning formula

As a presidential candidate in 1994, Lula opposed Cardoso's changes - and was trounced at the ballot box. But as president, he adhered to Cardoso's market-friendly policies, appointing financial managers who were well regarded on Wall Street.

He also created ambitious social programs or greatly expanded those created under Cardoso, which helped more than 20 million Brazilians emerge from grinding poverty.

Lula is now preparing to leave the presidency with an approval rating hovering at 80 percent.

"If he ever became a candidate again, I would vote for him again," said Edir Paulo Jose, 60, a doorman in Rio de Janeiro.

Historians and economists say Lula benefited from historically high commodity prices, driven in part by China's apparently insatiable need for iron ore, meat and soybeans. They also note his astuteness in carrying on with Cardoso's successful programs while launching innovative ones of his own.

"That, combined with his own great political skills and his charisma, was the formula that really constituted this unprecedented success in Brazil's history," said Michael Shifter, president of the Washington-based Inter-American Dialogue.

Analysts say that perhaps a key reason Cardoso's accomplishments have been forgotten is that his presidency was hit by economic troubles toward the end. He had to devalue the currency, and the economy Lula inherited in 2003 was fragile. In contrast, the economy Lula leaves is growing strongly, drawing record amounts of foreign investment.

In a September speech, recalling his first year in office, Lula said, "We had to clean house." This month, in a clear reference to Cardoso, he asked voters "not to forget about privatizations in Brazil, the [International Monetary Fund], unemployment, hopelessness, lack of opportunity."

Cardoso said he can only shake his head.

"It's as if I were a big stone in Lula's way," Cardoso said. "It's not true. But he believes that he has to destroy me."

Special correspondent Paula Moura in Sao Paulo contributed to this report.

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