Lula Shuns Davos Elite for Anti-Capitalist? Jamboree (Update1)

By Joshua Goodman

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Jan. 29 (Bloomberg) — Brazilian President Luiz Inacio Lula da Silva is shunning the World Economic Forum in Davos this week and the chance to hobnob with business leaders and 41 heads of state. Instead, he'll join more than 100,000 activists from around the world at an anti-capitalist jamboree in the Amazon.

Lula's government is spending 78 million reais ($34.4 million) to bring groups from 59 countries to the 8th World Social Forum. They include a sex workers union from India and Belgians seeking to abolish the World Bank. Today, he'll discuss the global financial crisis on a panel with Venezuelan President Hugo Chavez, one of the U.S.'s harshest critics, and Chavez's presidential allies from Bolivia, Ecuador and Paraguay.

"He picked sides," said Oded Grajew, a former businessman who organized the first Social Forum as a counterpoint to Davos in 2001 and has been a friend of Lula's for 20 years. "Lula doesn't want go to Davos and hear the same ideas that led the world into bankruptcy."

Lula's decision to attend the forum is a slap at the bankers whose "casino" mentality he cites almost weekly as bringing about a crisis in capitalism. It also helps shore up support among his leftist base, who heckled him at his last appearance at the forum in 2005 for allegedly governing on behalf of Brazil's elites.

'Human Face'

In 2003, Lula, a former trade union leader, used his first trip to Davos as president to assure investors he had no intention of defaulting on the country's foreign debt. Returning for the third time in 2007, he was praised by Davos president Klaus Schwab for creating a model of "globalization with a human face."

Opposing globalization was one of the organizing themes of the first Social Forum in Porto Alegre, Brazil. Lula's Workers' Party, which helped fund the event, has backed it ever since. In 2002, Lula, 63, announced his presidential candidacy at the second gathering, telling red-flag waving crowds that Brazil was "too poor" to pay foreigners what it owed.

This year's forum, titled "Another World Is Possible," takes place in Belem, a city near the mouth of the Amazon River.

"While in Davos they're meeting for the world that's dying, here we're meeting for the world being born," Chavez said on Venezuelan state television after landing today in Belem.

'Oysters and Champagne'

"These days, any suggestion Brazil's credit standing depends on whether its president sprints to a Swiss ski resort and eats oysters and champagne with bankers is preposterous," said James Galbraith, a University of Texas economist who's scheduled to meet Lula in March in Brasilia and advised President Barack Obama during the campaign. "Davos needs Lula. Lula doesn't need Davos."

Still, for the leader of the world's tenth-largest economy, the so-called Tropical Woodstock makes for offbeat company. In contrast to Davos, attended by U.K. Prime Minister Gordon Brown and German Chancellor Angela Merkel, hundreds of Amazonian Indians in traditional garb danced this week to the beat of samba drums in Belem to publicize their land claims. About 20,000 activists are sleeping in tents at a "youth campground."

"I don't see any reason for him to be in Davos and many for him to be at the World Social Forum," Marco Aurelio Garcia, Lula's top foreign policy adviser and the former head of the Workers' Party, said in a phone interview. "Maybe Davos should be just a meeting of bankers so they can do a self-critique."

Davos is "important" though it was a "natural choice" to attend the social forum, presidential spokesman Marcelo Baumbach said yesterday when asked why Lula didn't go to Switzerland.

Presidential Politics

Lula will be joined by a dozen cabinet ministers, including his preferred successor as president, Cabinet Chief Dilma Rousseff. The intrusion of presidential politics is stirring fears among some activists that the Social Forum is evolving into a genteel debate forum like the one it set out to counter.

In 2001, French anti-globalization leader Jose Bove, infamous for destroying a McDonald's Corp. restaurant, was arrested with members of Brazil's Landless Workers Movement after raiding a farm run by Monsanto Co. By contrast, this year's 1,900 activities range from a workshop on how to hold banks accountable to society to ways the Amazon rain forest that engulfs steamy Belem can be protected.

"There's always dissent among activists, but I have no doubt Lula will be well received," said his friend, Grajew.

Standing Invitation

Lula has a standing invitation to Davos, too, where a record 41 heads of state, up from 27 last year, make it "the place to be" for mapping strategies to end the global economic crisis, said Mark Adams, a spokesman for the forum.

Of those attending, 11 hail from the Group of 20 major economies. In November, following the group's first heads-of- state summit, Lula said the more exclusive G-8 "no longer had any reason to exist" in a globalized world. The next meeting of G-20 leaders will be London in April.

Nick Chamie, global head of emerging-markets research at RBC Capital Markets, said he sees Lula's skipping Davos as a "missed opportunity" to raise the profile of Brazil and its companies as they seek to refinance $64 billion in maturing foreign debt this year.

"This may play well with the local electorate but it certainly doesn't help Brazil internationally," Chamie said in a phone interview from Toronto.

To contact the reporter on this story: Joshua Goodman in Rio de Janeiro

Last Updated: January 29, 2009 11:08 EST