October 27, 2002 10:38 PM ET
By Mary Milliken
SAO PAULO, Brazil (Reuters) - Former metalworker Luiz Inacio Lula da Silva clinched Brazil's presidency in a runoff on Sunday, winning a huge mandate to lead the first elected leftist government in Latin America's largest nation.
With 98 percent of the official ballots tallied, the man everyone calls Lula had won 61 percent of the vote, prompting rival Jose Serra, the candidate of President Fernando Henrique Cardoso's ruling coalition, to concede defeat.
"Hope won over fear," Lula said in an improvised speech before heading out to the streets of Sao Paulo to celebrate his record-breaking 51 million votes on the day of his 57th birthday. "Brazilians voted without fear of being happy."
In his fourth bid to be Brazil's first working-class president, Lula rode a wave of discontent with rising unemployment and spiraling crime but was forced to move to the center to woo voters wary of his radical past.
He sent a message to financial investors from Sao Paulo to Wall Street who doubted his ability to run the world's ninth largest economy and its delicately balanced $260 billion in public debt. The doubts have battered the currency this year.
"I think the market will tend to calm from here on," said Lula, who will be sworn in for a four-year term on Jan. 1, 2003. "Everyone knows it is not normal to have the real (currency) at 4 to the dollar."
Legions of Lula voters spilled out into the streets two decades after the former labor leader organized massive marches against the military dictatorship in Sao Paulo's industrial belt and planted the seeds for his Workers' Party.
"Lula said he was being elected president of the republic in the name of our generation, everyone who fought for democracy in Brazil and dreamed about this moment," said party President Jose Dirceu.
The election and the government transition are considered a vital test for Brazil's young democracy in what is the fourth presidential vote in the world's fourth most populous democracy since the end of the 1964-1985 military rule.
Lula takes over at a difficult time, where a decade of unbridled free-market reforms have shown mixed results.
While Cardoso choked off hyperinflation and brought large investment, unemployment is at its highest level since early 2000 and wages are falling. A financial crisis has crippled the currency and sparked fears of a default on its debt.
Brazil also has the world's second-highest murder rate -- following war-torn Colombia -- fueled by urban warfare between drug gangs and rampant crime in the sprawling cities where plush condominiums overlook teeming slums.
RED FLAGS WASH OVER STREETS
Lula's promises of stability and social programs for Brazil's 170 million people appealed across economic classes, beyond the factory workers and academics at his party's roots.
Revelers carrying the Workers' Party's red and white starred flags converged at the same points where Brazilians celebrate their soccer successes, such as Avenida Paulista, the main financial thoroughfare in Sao Paulo.
In Rio de Janeiro, a parade worked its way from the Christ statue of the famed Corcovado mountain down to the city center, while crowds took to the bars in the capital, Brasilia.
"This is a dream come true. I've been waiting for more than a decade," said dentist Sandro Rogerio Cardoso, whose family plans to attend Lula's inauguration.
Lula won 46 percent to Serra's 23 percent in the first round vote on Oct. 6. A runoff was needed because no candidate obtained a majority. Since then, Lula fever has spread.
The two candidates who did not make the runoff threw their weight behind him soon after the first round and business leaders increasingly lined up behind Lula.
Serra, a U.S.-educated economist and health minister under Cardoso, waged an aggressive campaign, warning voters of turning the delicate economy over to a man with an elementary-school education and no administrative experience.
But Serra extended an olive branch to Lula on Sunday, telephoning him with his congratulations. "I wish the winner the best of luck in steering Brazil's destiny and fulfilling his campaign promises," Serra said.
BUSH SALUTES LULA
World leaders and financial markets have closely tracked the Brazilian vote for its impact on investment and trade negotiations in the Americas and with Europe.
President Bush saluted Lula's victory aboard Air Force One en route from Mexico to Arizona.
"The president congratulates the winner of the election and looks forward to working productively with Brazil," White House spokesman Ari Fleischer told reporters.
In the face of the expected landslide, investors have warmed to Lula, who says he will strike a "social pact" uniting workers, intellectuals and the elite to resolve Brazil's ills.
"Wall Street is looking to see if the Lula who takes office is the more moderate, forward-thinking person who appeared in this campaign or if he reverts to his life-long leftist stance," said David Roberts, senior international economist at Banc of America securities.
Cardoso has ordered his top aides to organize a smooth transition with the incoming president. Lula is expected to announce his transition team in the next two days as he travels to Brasilia to meet the president. -- Yoshie
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