* Brazil's most popular politician loses his magic
* Top aides to former president on trial at Supreme Court
* Lula's legacy at stake, economic achievements questioned
By Anthony Boadle
BRASILIA, Oct 9 Until a few weeks ago, Brazil's
most popular politician and two-time president, Luiz Inacio Lula
da Silva, could seemingly do no wrong.
Yet a corruption trial involving many of his closest former
aides, plus new evidence that he was not the economic wizard
some took him for, has tarnished Lula's reputation - and cooled
speculation that he might try to return as president in 2014.
Mesmerized Brazilians have watched for two months on live TV
as several of Lula's former confidants stand trial on charges
that they bribed legislators in Congress during his 2003-10
presidency. Convictions could come as soon as this week.
While Lula himself is not implicated, the massive scope of
the corruption detailed during the trial has made many
Brazilians wonder how he could possibly have not known about it.
Jose Chrispiniano, a spokesman for Lula, said the former
president does not believe the vote-buying scheme existed, but
he will accept the Supreme Court's ruling on the case.
At stake is his legacy.
He was Brazil's first working-class president, a
gravelly-voiced former metalworker and labor union leader who,
despite never finishing high school, won the confidence of Wall
Street and became a powerful symbol of the social mobility that
his government fostered.
Under Lula's watch, growth averaged better than 4 percent a
year while income inequality fell, lifting 30 million people out
of poverty and into a modern consumer market. He left office
with an astronomical 88 percent popularity rating.
"That created an aura around Lula as an untouchable figure
who was beyond good and evil. This trial has put that into
question and will tarnish his image," said political consultant
"Even though Lula is not in the dock, it his government and
his political machine that are there on trial," Cesar said.
The scandal originally blew up in 2005 when local media
alleged that Lula's operatives were paying a monthly bribe -
known as a "mensalao" - of about $10,000 to legislators in
return for their votes.
Lula survived the ensuing scandal and he was re-elected a
year later, but his trusted deputy and chief of staff Jose
Dirceu was forced to resign. Dirceu, the most high-profile
former official now on trial, faces a possible jail sentence of
up to 12 years as alleged mastermind of the bribery scheme.
The then president and treasurer of the ruling Workers'
Party, or PT, are also on trial for corruption and conspiracy.
Two dozen people, including ten legislators, bank executives
and business intermediaries have already been convicted on
corruption, fraud, money laundering or conspiracy charges for
diverting public funds to buy support for the PT in Congress.
The trial at the Supreme Court reawakened public interest in
the high-profile case because Brazil's highest court has never
convicted a Brazilian politician for corruption, let alone using
millions of dollars in public money to bribe legislators.
Even Lula's stewardship of the economy is being reexamined
in the current global slowdown that has seen Brazil's economic
growth fall from 7.5 percent in 2010, Lula's final year in
office, to a meager 1.6 percent expected this year.
The boom under Lula was fueled in part by soaring world
prices for Brazil's iron ore, soy and other commodities, driven
up by demand from China. In retrospect, critics say his economic
policies relied too much on expanding consumer spending and
overlooked investment to reduce costs and make the world's sixth
largest economy more efficient.
"He was surfing an international wave of good times," said
David Fleischer, a politics professor at Brasilia University.
"The growth rate in 2010 was really off the wall, and we are
still paying the bill, because this was pumped up artificially
with a lot of public spending," Fleischer said.
While the fast growth of 2010 helped sweep Lula's
hand-picked successor President Dilma Rousseff into office,
opponents say he injected too much money into the economy to
Those resources - they argue - should have been used to
upgrade roads, ports and other dilapidated infrastructure that
have become serious bottlenecks for the economy and may limit
growth in coming years.
MAGIC TOUCH FADING
Lula still has strong pull in Brazilian politics - one PT
leader, Marta Suplicy, called him "God" - and would probably
beat any candidate the opposition could field today in a
presidential race. The scandal hurt Lula's image among the
middle class but he still has solid support among 30 percent of
voters who would back him no matter what, polls show.
Yet his magic touch as a kingmaker whose candidates were
bound to win election appears to be wearing off.
In Sunday's municipal elections, Lula's chosen candidate for
mayor of Sao Paulo, Fernando Haddad, scraped through to a
second-round vote after trailing in the polls for most of the
campaign. It was the worst PT showing for mayor of Brazil's
largest city since 1996.
Polls prior to the vote showed that Haddad's support may
have fallen by around 10 percent due to the "mensalao" scandal,
which rival Jose Serra of the centrist PSDB used against him.
Lula turned out to campaign for PT mayoral candidates in key
races, but the 67-year-old leader who is recovering from throat
cancer was a shadow of his former self.
Gone was the rousing speaker who could rally thousands of
workers in a soccer stadium without a microphone. Instead a
beardless Lula spoke to smaller crowds with a fragile voice in
his first campaign speeches in two years.
"He is still the big name in Brazilian politics and
continues to be politically active, but he no longer has the
weight he had two years ago. He is not the political force he
used to be," said Cesar, the political consultant.
After 12 years in power, Lula's party is facing voter
fatigue in Brazil's larger cities and competition from parties
within its governing coalition that are breaking away to field
their own candidates in local elections.
Speculation about Lula running again - and that he picked
his former chief of staff Rousseff to succeed him to keep the
presidential seat warm for his return - is losing steam.
Cesar said Lula is physically not up for it after having
chemotherapy and radiation for a tumor in his larynx.
Besides, Rousseff has established her own style of
governing, filled her cabinet with her own people and distanced
herself from Lula's faction within the Workers' Party.
She has not been hurt by the "mensalao" scandal and her
approval ratings after almost two years in office are higher
than Lula's at the same juncture.
"Rousseff is the party's 'A' plan at this point. Her
popularity is high, the opposition is weak and the economy could
rebound to give her more bounce," said Joao Augusto Castro Neves
of Eurasia Group, a think-tank.
Chrispiniano, the former president's spokesman, said Lula
currently has "no plans" for 2014.