Brazil's Luiz Inacio Lula da Silva, second right, with Venezuela's Hugo Chavez, Bolivia's Evo Morales and Ecuador's Rafael Correa at the meeting in which they talked about regional integration in Manaos, Brazil, October 2008.

The Brazilian president has emerged as the chief mediator in the region, riding a wave of popularity and galloping economic growth at home and acting as a counterweight to Venezuela's Hugo Chavez.

By Chris Kraul and Patrick J. Mcdonnell
Los Angeles Times Staff Writers

SAO PAULO, BRAZIL — Buoyed by a robust economy and his ability to work with leaders across the ideological spectrum, Brazilian President Luiz Inacio Lula da Silva has emerged as the chief power broker and mediator in South America.

Lula's rise has paralleled the decline of U.S. influence in its "backyard," analysts say, a result in part of Washington's plummeting global prestige and the Bush administration's unremitting focus on the Middle East.

A moderate with an unassailable leftist background, Lula has become the point man for healing regional crises such as the current turmoil in Bolivia and the recent escalation of tensions among Colombia, Venezuela and Ecuador.

Lula, who survived overlapping corruption scandals, exudes the persona of a level-headed leader who eschews ideology for solutions. The can-do image and the country's economic prosperity have helped win him soaring popularity at home and abroad.

"Lula is the ultimate pragmatist," said former Finance Minister Delfim Netto, an advisor.

The president seems intent on fulfilling Brazil's long-unrealized economic and political potential and making it a recognized world power, starting by asserting its role as South America's preeminent presence.

Lula's skills as a mediator probably will be tested as the region enters a renewed period of uncertainty: the prospect of civil war in Bolivia, a shaky leftist government headed by an ex-bishop in Paraguay, Venezuela's emerging alliances with Russia and Iran, and a new U.S. president to be elected in the midst of a financial crisis that probably will continue sending ripples through the hemisphere.

Lula, who began a second term in 2007, has increasingly asserted his influence as he and Venezuelan President Hugo Chavez vie for the hearts and minds of contemporary Latin Americans. Venezuela's arms deals and foreign alliances have played a role in Brazil's decision to bolster its military, analysts say.

"Since the beginning of his second term, Lula began to compete vigorously to counter Chavez's aspirations as a regional leader," noted Julio Burdman, an Argentine political analyst.

But Lula's aims transcend any competition with Chavez, whose nation is much smaller than Brazil. Lula has loftier goals, even pushing for a permanent seat for Brazil on the U.N. Security Council, however unlikely.

Whether he's sloughing off Chavez's strident anti-Americanism or privatizing roads and power plants in Brazil, the former union firebrand who emerged from the assembly lines of Sao Paulo has repeatedly defied stereotypes since taking office in 2003 as the avatar of a new generation of leftist leaders. He has gone from being what some considered a radical bent on imposing socialism to a free-market champion who still funds social programs for the poor.

Lula enjoys a warm relationship with President Bush and was a guest last year at Camp David. But he's no U.S. patsy, challenging Washington on economic and security issues when he sees Brazil's interests at stake

On Tuesday, Lula assailed Bush's farewell address to the U.N. General Assembly last month for downplaying the U.S. financial meltdown.

"I thought he would make a goodbye speech that talked a little about the economic crisis," Lula, appearing disappointed, told reporters in New York. "He took the option of talking about terrorism again."

Lula also has gone toe-to-toe with U.S. trade negotiators as informal leader of the "Group of 20" developing nations, blocking trade deals that incorporate U.S. and European farm subsidies that the group says are unfair.

But for U.S. policymakers, Lula is a welcome counter-weight to Chavez's yanqui-bashing bluster. Last month in Santiago, Chile, Lula trumped Chavez at an emergency summit of South American leaders seeking to calm widening conflict in Bolivia, which shares a long border with Brazil.

The Brazilian president insisted that the group's final declaration omit anti-Washington invective -- to the dismay of Chavez and Bolivian President Evo Morales, both of whom have expelled U.S. ambassadors for alleged coup-mongering.

Many analysts conclude that the days of Washington calling the shots are gone -- collateral damage, in part, from the attacks of Sept. 11.

"That's when the U.S. clearly began focusing its attention on the Middle East, Afghanistan and Iraq, and many sensed the loss of engagement with the region," said Peter De Shazo, a former deputy assistant secretary of State for the Western Hemisphere now at the Center for Strategic and International Studies in Washington.

In Venezuela, Chavez survived a short-lived 2002 coup that he blamed on Washington, and returned with renewed anti-U.S. fervor. Chavez lured allies with petrodollars and Cold War-era oratory as the Bush administration went to war in Iraq.

"Part of the problem for the United States is the tremendous antagonism with Venezuela, which makes a U.S. role very problematic," noted Michael Shifter of the Inter-American Dialogue, a Washington think tank. "But it's also much deeper. It reflects the fact that Brazil and other countries in the region want greater independence from the United States and want to resolve problems on their own."

Although Chavez has won wide popular appeal among the region's young and disenfranchised -- and Venezuela's oil wealth has bought allies -- his divisive discourse has also alienated many.

With Chavez, Lula dances a delicate tango: He maintains cordial relations with his oil-rich neighbor, a major client for Brazilian goods and services, while sidestepping the Venezuelan's incendiary rhetoric.

Still, Lula shares the United States' wariness about Chavez's burgeoning arms deals and Venezuela's planned military exercises with Russia, noted Amaury de Souza, a political analyst here.

Lula has ordered a strategic review of Brazil's military that could result in massive rearming. Brazil is also considering a purchase of jet fighters from U.S., French and Swedish bidders and a nuclear submarine deal with France.

At home, Lula's popularity -- an opinion poll out last week put his approval rating at 68% -- has little to do with submarines and foreign policy. It's all about the galloping economy.

Brazil, a vast, fertile nation that is among the world leaders in exports of soybeans, beef, iron and coffee, is shedding the vestiges of its Third World image. It has scored big in the worldwide commodity boom, spurred by voracious Asian demand. International investment is pouring in.

In a nation notorious for its unequal distribution of wealth, Lula has managed the difficult challenge of pleasing both the affluent and the impoverished multitudes. While the rich are getting richer and the middle class is expanding rapidly, Lula has dedicated massive social spending to the less fortunate.

"Lula has been lucky: He has had big oil finds at home and economic conditions around the world have been favorable for Brazil," said Aldo Musacchio, a Brazil specialist at Harvard Business School. "The current [U.S.] economic crisis may be a big worry, but in Brazil incomes are growing and people don't think the situation is bad at all."

chris.kraul@latimes.com

patrick.mcdonnell @latimes.com

Kraul reported from Sao Paulo and McDonnell from Buenos Aires and Santa Cruz, Bolivia. Special correspondents Mery Mogollon in Caracas, Venezuela, Marcelo Soares in Sao Paulo and Andrés D'Alessandro in Buenos Aires contributed to this report.