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 Saturday, 4 January, 2003, 01:50 GMT
Brazil opts for butter before guns
Brazil's new President Luiz Inacio Lula da Silva (r) with his wife, Marisa (l)
Lula says he must stick to strict budgetary constraints

Brazil's new left-wing government has decided to suspend the purchase of 12 military jets so it can spend more on social programmes.

Brazilian woman with her child in a shanty town
About one-third of Brazilians live in poverty
The Defence Minister, Jose Viegas, said he was postponing rather than cancelling the purchase, which could cost anywhere between $700m and $1bn.

At his first cabinet meeting since being sworn in on New Year's Day, President Luiz Inacio Lula da Silva told his ministers that they all had a role to play in his campaign against hunger.

Brazil's new president has made it clear that his top priority is to improve social conditions for the poor, but he also intends to stick to tight budgetary restraints.

The only way to square this circle is to cut spending elsewhere, and it is the armed forces who are the first to suffer.

Anti-hunger campaign

The air force has been told it will have to wait another year for the purchase of the fighter jets - a contract which is already being competed for by several international aerospace companies.

At his first cabinet meeting, Lula returned to his favourite theme: a campaign against hunger which he says has to involve every sector of government, not just the ministries of agriculture and food security.

It is estimated that 15% of the country's population are seriously malnourished and one-third of all Brazilians live in poverty.

Analysts say that in political terms, the anti-hunger campaign is important as a demonstration of the new government's reforming intentions.

Because of the current economic circumstances, they do not yet have the money to put other ideas into practice.

Lula's first days in office seem to have reassured the financial markets and the Brazilian currency, the real, has been making steady gains.


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