Peru's Humala burnishes moderate image in Brazil

Reuters News
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Posted: Jun 09, 2011 5:33 PM
Peru's Humala burnishes moderate image in Brazil

By Ray Colitt and Terry Wade

BRASILIA/LIMA (Reuters) - Peruvian President-elect Ollanta Humala praised Brazil on Thursday for fighting poverty while fostering economic growth, seeking to show he will lead as a moderate leftist who has shed his radical past.

Humala, a former army officer, has sought to quickly dispel fears he will govern like Venezuela's fiery President Hugo Chavez, who was once his political mentor and is known for nationalizing private companies and railing against Washington.

By going to Brasilia only days after winning election, Humala has also made it clear he wants stronger ties to Brazil, which is consolidating its role as South America's leader at a time of economic malaise in the United States -- traditionally one of Peru's closest allies.

"Brazil is a successful model that combined economic growth and social mobility," Humala said after meeting with Brazilian President Dilma Rousseff.

Brazil's ruling Workers' Party has combined social programs for the poor with policies that court private investment to turn Brazil into one of the world's top-performing economies.

Peru's stock market plunged 12.5 percent on Monday, the day after Humala's victory, its largest one-day loss ever.

But it has since recovered as he pledged to respect private investors, run a balanced budget and keep inflation low. He has promised to safeguard the economy while spreading the wealth from a decade-long boom to the one third of Peruvians still mired in poverty.

Humala has tried since he lost the 2006 race to reinvent himself as a moderate leftist, and this year he hired two former Workers' Party aides from Brazil to help run his campaign. To woo centrist voters, they recast him as a serene family man instead of an unpredictable rabble-rouser.

Their strategy mirrored what the Workers' Party did to soften the image of Luiz Inacio Lula da Silva, who won the Brazilian presidency in 2002 as a moderate after failing three times on a hard-left platform.

Humala will meet with Lula on Friday. He will travel to Paraguay, Uruguay, Argentina and Chile on a six-day trip through South America, but not to Venezuela.

U.S. VERSUS BRAZIL?

Since being elected, Humala has called the United States a "strategic partner" and says the two countries must work closely to combat drug trafficking in the world's top producer of coca, used to make cocaine.

The countries also implemented a bilateral free-trade agreement in 2009 that has spurred commerce.

But Humala also sees a promising future for Peru as a trade hub on the Pacific Ocean between two mammoth, fast-growing markets: China and Brazil.

"One objective of the president-elect is to open the Brazilian market, we're talking about a market of 200 million. This would be as important as the free-trade pact with the United States," said Daniel Abugattas, a legislator from Humala's Nationalist Party.

Though Humala has a constructive relationship with U.S. diplomats and meets with them regularly, he is more likely to forge closer ties with Brazil -- whose firms are pouring billions into Peru to build roads, dams and power plants.

"It's possible that Humala will have cordial but cool relations with the United States, while placing more emphasis on regional integration" led by Brazil, said one South American diplomat who declined to be named.

Humala has said he wants to help strengthen Unasur, a political bloc of South American countries that Brazil spearheaded in 2008 and which explicitly excludes the United States.

One of Brazil's stated foreign policy aims over the past decade has been to shift the global balance of power away from traditional powers to reflect the growing importance of developing countries.

Humala has also voiced interest in joining Mercosur, the South American trade bloc led by Brazil -- though doing so could cause trouble by breaching the terms of Peru's free-trade pact with the United States.

(Reporting by Ray Colitt in Brasilia and Terry Wade in Lima; Editing by David Lawder)