'There Is No Magic'.(Brazil's finance minister Antonio Palocci talks about economic policies)(Interview)

Latin American Finance ministers generally hail from elite universities, big banks or trendy economic consultancies. Brazil's Antonio Palocci comes from Ribeiro Preto, a cow town in So Paulo state, where he twice served as mayor. A trained physician with a soft spot for Leon Trotsky, he taught himself how to balance a (meager) budget. Now, at 42, he's running South America's biggest economy. Recently he talked with NEWSWEEK's Mac Margolis in Brasilia. Excerpts:

MARGOLIS: Do you ever wake up and wonder how you moved from doctor to mayor to Brazil's top economic authority?

PALOCCI: It all happened very rapidly, but I feel at home in this area. My role in the ministry is really to coordinate economic policies. I took care to select a qualified team of economists. The good thing is, there's only one physician in the ministry.

Brazil's economy has turned around dramatically since you took office. What's gone right?

The beginning of [Lula's] government was marked by a firm commitment to sound public finances and budget control. Our aim was to produce a positive shock to an economic process that was spinning out of control. So we undertook a policy of severe adjustment, and it worked. President Lula knew that [austerity] was not going to be popular. We could have let inflation go and easily provoked a spurt of growth--but that would have led to an explosion of prices and growing doubts over the sustainability of servicing our debt. So we locked the door on doubt and built a policy to restore stability. Once Brazil is stable, we can prepare for growth.

Everybody changes, but why did Lula and the PT turn to conservative economic policies?

I don't consider this conservative. These are ...