SAO PAULO, Brazil (AP) - In yet another attempt to soothe anxious markets, presidential front-runner Luiz Inacio Lula da Silva said Monday that he will not halt payment on Brazil's foreign debt as a means of bolstering the flagging economy.
"We made it clear in an open letter issued in June that a Workers Party government would honor all of its international commitments," Lula, as he is popularly known, told a news conference.
But, Lula warned, continuing present economic policy and the resulting high interest rates could lead to bankruptcy and default.
"No country's economy can grow when interests rates are higher than the profits obtained by companies that produce," Lula said.
Brazilians go to the polls on Sunday. President Fernando Henrique Cardoso is barred by the constitution from running for a third term.
Brazil has a foreign debt of $236 billion, about $100 billion of which is owed by the government. Earlier this year, neighboring Argentina defaulted on its huge debt — the largest sovereign default on record.
Lula said he backed the terms of the International Monetary Fund's recent $30 billion loan package to Brazil, but that it had been less effective than hoped in calming market jitters.
"We thought it would allow for a smooth transition, but we were mistaken," Lula said, adding that talk of war against Iraq, accounting scandals in the United States and a slowing global economy have hurt Brazil and other emerging market nations more than expected.
Lula also got the backing of the Rev. Jesse Jackson, who on Sunday compared the candidate to Martin Luther King and Nelson Mandela.
"I was with Martin Luther King ... and with Nelson Mandela ... and they were inspired by a special spirit," Jackson told a congregation of 400 gathered at the First Baptist Church in Santo Andre, an industrial suburb on the outskirts of Sao Paulo. "And the same special spirit ... is inspiring Lula."
Standing next to the former metalworker, Jackson said Lula has been "touched by God."
Jackson also appeared with Lula at a late Sunday night rally where they were greeted by nearly 200,000 supporters.
Lula is a critic of the U.S.- sponsored Free Trade Agreement of the Americas, or FTAA. He says the agreement "will only become viable when all countries have equal opportunities and conditions to become competitive."
"If we do not first create the mechanisms to achieve this competitiveness then the strong economies will suffocate the weaker ones."
Lula said his government would favor production over speculation. "The day will come when he who plants tomatoes will make a bigger profit than he who buys government bonds," he said.
During Sunday's rally, Lula said he would not approve the Free Trade Agreement now being proposed.
Jackson is in Brazil at the invitation of the Workers Party, in a bid to attract more votes from the Protestant community.
He said the hemisphere-wide free trade zone, scheduled to be in place in 2005, would amount to "annexation of Latin America by the United States."
'The United States is defending its own interests — as it has a right to — by subsidizing its agriculture and creating tariff barriers for products in which we are competitive," Lula said at the news conference. "This means we must be just as intransigent in the defense of our interests as the United States is in defending its interests."
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