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Leftist Candidate Leads in Brazilian Presidential Race - 2002-10-01

In Brazil, it was another day of volatility on financial markets, partly in response to the latest opinion polls showing a leftist presidential candidate could win a first round election victory next Sunday. Meantime, the candidate, Luiz Inacio "Lula" da Silva, Monday blamed speculators, and predicted the market volatility will end after the elections.

Mr. da Silva accused unnamed foreign and domestic banks of speculation, saying they are trying to make "easy money." At a news conference with foreign reporters, he went on to predict the speculators will lose money, because the market volatility, he said, will end after the elections.

Mr. da Silva, who is the presidential candidate of the left-wing Workers' Party, said there have been similar instances of speculation in other countries prior to elections. He said even in countries where democracy is more solid than in Brazil, like England, there was market uncertainty over Mr. Blair before the elections. The same thing happened in Mexico, he said, prior to the election of Vicente Fox, even though he had ties to the Mexican elite.

Mr. Da Silva, who was once a metal worker and union leader, has an overwhelming lead in the opinion polls for next Sunday's election. The latest survey over the weekend showed Mr. da Silva - who is better known by his nickname, Lula - has almost enough support to score an outright victory next Sunday by winning absolute majority, thereby avoiding a runoff election on October 27.

The result of this latest poll is believed to be at least partly responsible for a particularly volatile day Monday on currency markets. The Brazilian "real" fell to record lows against the U.S. dollar during trading, but then recovered after Central Bank intervention.

The prospect of a Lula da Silva presidency has been unnerving financial markets for months. The markets are concerned that Mr. da Silva and his Workers' Party will be unable to manage Brazil's $260 billion debt, and will lead the country to bankruptcy. But Mr. da Silva Monday said it will be the current government's economic policies, not those of the Workers' Party, that will bankrupt Brazil.

Mr. da Silva, who is making his fourth run for the presidency, spent most of the news conference answering questions about his political philosophy. He refused to label himself as a leftist, saying instead that he and his party have changed over the years, as Brazil has changed. If this had not happened, he said, he and his party would have been left behind.

At the same time, the front-runner made clear, if he wins, his government will direct more investment toward social programs to ameliorate Brazil's widespread poverty. He added that even his choice to fill the position of Central Bank chief will have to be someone who is not just concerned with the markets, but also with the impact of the Bank's policies on, as he put it, the hungry and the unemployed.