Published by Minyanville

Popular former Brazilian president Luiz Inácio Lula da Silva was diagnosed last week with cancer of the larynx, for which he has already begun chemotherapy. Lula, as he is affectionately known, is the country’s most popular president ever and his illness will shock many who were hoping to see him back at the helm after incumbent Dilma Rousseff completes her four year term in 2015.

 

“Rousseff,” writes The Economist, “was considered by many to be a placeholder president, keeping the lights on at the Planalto palace until her former boss returned.” Lula mentored Rousseff into the presidency last year and her policies have followed suit.

 

With six ministers having resigned already this year, Rousseff is seen as having taken a tougher line on corruption by supporters but as a political novice, unable to control her cabinet, by critics. While Lula had a “jovial, folksy charm,” write Reuters, Rousseff is seen as a technocrat with a sharp mind though a stern-face. She herself was treated for lymphoma in 2009.

 

However, The Economist concedes that Rousseff, “looks like a president, rather than like someone pretending to be one.”  This, coupled with Lula’s illness, is making it more likely that she will stand for a second term.

 

The speed at which Lula’s illness has been publicized and progress monitored is in stark contrast to that of President Hugo Chávez in Venezuela. Rumors swirled around Caracas for months before the cancer was finally announced in late June and still the type of cancer has not been confirmed.

 

This highlights the growing chasm between the two sides of Latin America’s Left: the old school of Chávez and his comrades Fidel and Raúl Castro in Cuba versus the more moderate Lula and Rousseff. Hiding Lula’s cancer in Brazil would have been difficult thanks to its “tenacious press,” writes The Economist. The same cannot be said of Venezuela’s press.

 

Lula’s tumor is “not very big” and the former president has an “excellent” outlook for recovery, according to an oncologist working with him.

 

Rousseff’s “stern face” is expected to be on show on the Côte d'Azur this week as the G20 meets to contain the eurozone crisis. Concern is growing for its impact on emerging markets. Finance Minister Guido Mantega has already criticized European leaders for their slow response. “The Europeans always take too long to find solutions,” he said. “And when they come they come late.”

 

Antônio Carlos Lessa, a Professor of International Relations at the University of Brasilia, told the Guardian that he believes Rousseff will “provoke” and “preach” to other G20 leaders. “Brazil now sees itself in a position to express these concerns,” on behalf of other emerging nations, Lessa said. “Brazil will confirm its position as a mediator between rich and poor countries.”

 

This leadership position will be bolstered by news that Brazil’s GDP for 2011 is expected to beat that of the UK, according to Economist Intelligence Unit (EIU) forecasts. This will put the Latin American behemoth into sixth place in the world’s largest economies, pushing the UK down to seventh position. Forecasts suggest that Brazil will plough through Europe’s economies over the next few years, overtaking France in 2014 and eventually overtaking Germany’s economy in 2020.

 

The sharp rise is thanks to growing relations with China including sales of soy and iron ore as well as Brazil’s 200m-strong population, according to the EIU.

 

However, it’s not all good news. Output fell 2% in September, its steepest fall since April which saw a 2.3% contraction. This is primarily thanks to worries in Europe as well as slowing growth in the US. One proxy for GDP, the Economic Activity Index, fell 0.53% in August, the biggest monthly drop since 2008’s global crisis, reports Bloomberg. This gives more credence to arguments that interest rates should continue to fall.

 

The major problems continue to be inflation and a now-weakening real—to blame for the 18% drop in net profit for world’s biggest iron ore produce Vale (VALE), which holds most of its debt in US dollars.

 

For the first half of this year, the currency was solidly appreciating. However, it U-turned in July and fell around 15% against the US dollar during the third quarter—a win for the country’s currency war though a loss for companies like Vale and most likely state oil firm Petrobras which releases its third quarter results next week.