President Lula: The boy from Brazil is back

President Lula, who arrives in Britain today for a state visit, has survived a corruption scandal and austere economic circumstances to ride high in the polls, says Andrew Buncombe

Less than six months ago Brazil's President, Luiz Inácio Lula da Silva, appeared down and out. Racked by a campaign funding scandal that enveloped his party, he was trailing in the polls and there would doubts he would even fight for re-election.

Now the man universally known as Lula appears to have bounced back and arrives in London today for a three-day state visit. He has lost 30lbs, foresworn alcohol and been politically reinvigorated by new numbers that show his approval rating has jumped to 53.3 per cent from a low of 47 per cent in November and suggest he could win re-election in October.

Mr da Silva has also gone back on the attack and dropped the defensive tone he adopted at the peak of the scandal.

Speaking during a tour of Brazil's northeastern region, where he was born, he said. "I haven't done everything that needs to be done. But I've certainly already done much more than the elite that governed this country for nearly 500 years and forgot about the poor part of the population."

Lula has been helped by two factors. First, a corruption scandal that besieged the Workers' Party (PT) and which strongly undermined his position has started to fade from the headlines. Second, he has been boosted by infighting by the main opposition, the Brazilian Social Democratic Party (PSDB), which cannot decide on a presidential candidate. The war of words between the camps of the two main contenders, Jose Serra and Geraldo Alckmin, has been public and often aggressive - especially so in the leaks and comments that their aides have been making to the press.

Lula has said that he will not announce his decision on whether or not to run until the summer though it widely assumed he is certain to run.

In the meantime he is acting very much like a candidate, travelling around the country much more than previously to meet people and to be present for photo-opportunities at the inauguration of public works projects - reaping "the fruits of what we planted". Observers are convinced he will run and there is no word of an alternative candidate from within the PT.

"The scandal has been passing and people have been focusing on what the government has actually been doing," Wanderley Guillherme dos Santos, a professor of politics at the Instituto Universitario de Pesquisas in Rio de Janeiro told The Independent. "There have been a lot of social programmes that have been very good."

When Brazil's most charismatic left-wing politician for a generation, Lula, was elected three and half years ago in a landslide victory of more than 60 per cent, there was cause for much celebration and optimism among leftists within Latin America. The former trade union leader had campaigned on a platform of populist, egalitarian policies and environmental protection. He promised more resources for education and health and vowed to provide land for at least 400,000 landless peasants. Along with Hugo Chavez of Venezuela, Lula - who campaigned against the military dictatorships of the 1970s and 1980s - represented an alternative vision for those opposed to the "neo-liberal" economic agenda of Washington.

"So far, it has been easy," he declared at the time. "The hard part begins now. We will work around the clock to fulfil every one of our campaign promises." Laden down by a IMF loan of $30bn (£17bn) signed by his predecessor, he has been forced to enforce a series of stringent austerity demands and debt repayments. The pay-off has been a steady growth of about 2.6 per cent - too slow for some critics who say Brazil should match China's 10 per cent, but enough to create a degree of security. At the same time, interest rates of 17.5 per cent have helped the banks but probably stalled further economic growth in a country of 186 million people.

At the same time, Lula claims he has been trying to tackle the issues of most pressing importance to many outside Brazil - the continuing destruction of the Amazon rainforest. Prior to his election victory in 2002, Lula campaigned vigorously as an environmentalist but in office it has been harder for him to match the rhetoric with deeds.

Agriculture remains the "green anchor" of the country's economy and the rainforest has been seen as a source of new arable land for crops such as soy beans, which in 2004 accounted for 10 per cent of Brazil's total exports. Brazil is the world's largest exporter of beef, coffee, orange juice and sugar, and is among the leading exporters of soy, poultry and pork. In 2004, total agricultural exports earned Brazil around $40bn. But the pay-off has been the destruction of the rainforest.

In the 12 months from July 2003 an estimated 10,500 square miles was cut down - the second largest annual amount on record. Brazilian officials said last December that the amount of deforestation between summer 2004 and 2005 had been cut by 31 per cent, but it still represented 7,300 square miles of forest being cleared for farmers, ranchers and mineral prospectors.

Indeed, just last week Lula approved a measure that offered 40-year contracts to the highest bidder for logging up to 3 per cent of the total remaining Brazilian rainforest. He said the scheme would help fight wildcat logging by paying for a new forestry service. Environmentalists around the world, however, are not convinced by this.

But they, of course, have not been Lula's biggest problem. The greatest threat to him running for and winning a second term was the corruption scandal that undermined his party and was firmly cemented in the popular imagination by the arrest of a political aide as he left Sao Paulo airport and was found to have $100,000 worth of Brazilian reals stuffed into his underpants.

Behind the arrest of the low-level aide in July last year was a far-reaching bribes-for-votes scandal, initially made public when a disgruntled politician, Roberto Jefferson, alleged that party officials had bribed politicians from coalition parties to vote for pieces of legislation. Mr Jefferson claimed that the owner of two advertising agencies had acted as an intermediary.

The PT, which has long styled itself as a clean-fighting political party, initially ignored the allegations. But that became an untenable position once a news magazine obtained documents that showed the advertising agency's chief had been guaranteeing loans of more than $1m to the party. The name of the party's chairman, José Genoino, a former left-wing guerrilla, was also on the documents and he was forced to step down.

The scandal had the potential to do even more damage had there been more documentary evidence about those involved in the scandal. But observers in Brazil believe the scandal has begun to fade from the front pages because there have been few new developments and that the allegations have become repetitive. The PT, it seems, has ridden out the storm.

"The scare is beginning to pass," said Ricardo Guedes, the director of the Sensus Institute, which conducted the poll.

"Voters are starting to focus instead on the government's achievements," he added.

Professor Guillherme dos Santos said that despite the corruption scandal, Lula had introduced several programmes aimed at helping the lives of his base support - the poor.

One of these was an ambitious anti-poverty programme called Zero Hunger, or Fome Zero, which was in turn replaced by a scheme called the Family Fund. This provided cash to poor families, expanded the number of families eligible for benefits and boosted pay-outs. There has also been a 25 per cent increase in the official minimum wage.

The results have been steady, but genuine. A poverty-tracking index maintained by the Fundacao Getulio Vargas (FGV) business school, suggests the percentage of the population afflicted by poverty has fallen from 27.3 in 2003 to just over 25 in 2004. In addition to this, experts say that Brazil's notoriously high level of inequality - monitored by the Gini co-efficient, a measure of the gap between the richest and poorest - has also been falling. At one time the inequality in Brazil - most pointedly the difference between the wealthier south and the dirt-poor north east - was among the highest in the world.

Lula - who the most recent poll suggested would win a presidential election with 47 per cent - is certainly happy to cite his achievements.

"How many countries have achieved what we have: fiscal responsibility and a strong social policy at the same time?" he told The Economist magazine. "Never in the economic history of Brazil have we had the solid fundamentals we have now."

He added: "The future will be built on strong investment in education and training, with tax relief to encourage new investment, notably in science and technology."

The Brazilian President, who will stay at Buckingham Palace during his visit, will hold talks with Tony Blair aimed at advancing the global trade talks held at Doha that were designed to reduce trade barriers and make trade fairer for developing countries. The two countries will also set up a committee to promote the further expansion of bilateral trade, now worth $4bn annually.

A Latin American superpower?

Brazil, if you had not already already noticed is now a Bric.

Three years ago a team of Goldman Sachs economists did Latin America's largest country an enormous service when they predicted that it would become one of the world's great economic powers within 40 years.

They coined the term Bric to refer to the combination of Brazil, Russia, India, and China in recognition that these political systems now embraced global capitalism. China and India, they said, would become the dominant global suppliers of manufactured goods and services in the world while Brazil and Russia would become similarly dominant as suppliers of raw materials.

The firm's economists argued that, given sound political decision-making and good luck, the Bric economies together could become larger than those of the world's six most developed countries. The research predicted nothing less than a profound shift in the global balance of power.

Brazil's economy has not performed as well as China's and India's, but by the standards of its recent past it is doing extraordinarily well. Over the next 50 years Brazil is expected to overtake Italy in 2025, France in 2031 and Britain in 2036.

Brasil, is the largest and most populous country in Latin America, and fifth-largest in the world.Named after brazilwood (pau-brasil), a tree highly valued by early colonists, it is home to some of the world's most extensive agricultural lands and to vast rainforests.

Exploiting vast natural resources and a population of 186 million, it is South America's leading economic power.

Leonard Doyle