The Brazilian economy continues to pick up and is now at the level it was
in 2002 before fears about Lula's winning the election caused turmoil, according
to some sources.
As it turns out, due to
pursuing the orthodox monetary and fiscal policies of the previous government,
the PT or Workers' Party government has as yet not proven to be the disaster
that many had predicted.
Due to healthy industrial
growth, unemployment has leveled off and people are spending money as fears
about loosing their jobs, if they have one, have lessened.
The GNP may grow by 4
percent this year, more than eliminating the negative growth during the first
year of Lula's reign.
This growth may not be
sustainable though, as industrialists are hesitant to invest in new plant
and equipment while unused capacity at many factories is reaching a low point.
Exports may reach a record
US$ 90 billion this year with a favorable trade balance of $ 30 billion a
These and other statistics
have caused a stabilization of the real, a reduction in the so called Brazil
risk to 555 basis points and have elevated the quotation of C bonds to over
0.96 US to the dollar.
Evidently foreign investors
and speculators feel that Brazil will be able to continue to service its debt
while rolling maturing principal.
The signs of a growing
economy have caused a nearly 10 percent improvement in Lula's popularity rating
as well as that of his government, according to recent polls.
With the October municipal
elections growing nearer, emphasis on the part of the PT is focused on the
city of São Paulo where incumbent Marta Suplicy, of the PT, has now
passed over José Serra in the polls.
This has caused a certain
amount of euphoria in the PT ranks and they are now talking openly of Lula's
re-election in 2006.
The PT while in the opposition
always was against a second term for elected officials. But now that they
are in control naturally the Workers' Party wishes to perpetuate their rule
and occupation of the apparatus of government.
Three recent proposals
of the PT government have caused uproar in the media and conservative circles.
One measure would create a Federal Counsel of Journalism that would have the
power to deprive reporters of their credentials and otherwise police their
The government claims
that the National Federation of Journalists (FENAJ) a union controlled by
leftist leaning members of CUT, an ardent PT supporting group of unions, prepared
If enacted, the first
steps toward muzzling the press and creating a Pravda or Granma will be in
place. The PT can dish out criticism but seems unwilling to take it. There
are plenty of semi-employed "journalists," members of FENAJ that
would happily work in government controlled propaganda agencies.
The second proposal is
to create a National Agency of Movies and Audiovisual (ANCIVAN) to monitor
the activities of the film industry. The rational behind this, according to
the government ministries involved, is to support the Brazilian filmmaking
industry. However, it reeks of censorship and totalitarianism.
A third proposal would
prohibit government employees below that of a certain rank to speak to the
press. These are merely examples of how the PT could gradually become an elected
dictatorship if given the opportunity.
Apathy on the part on
the populace, a very low educational level and compulsory voting make it easy
for an organized political party such as the PT to accomplish their goals.
PT party financing is
partially obtained by an involuntary levy that ranges from 0.5 percent to
20 percent, on the salaries of government employees and elected officials
who are members of the party.
This provides a strong
incentive for the government to create more ministries, agencies, advisory
counsels and other civil service jobs to be handed out party members with
little regard to the ability of these appointees to perform.
Therefore, Brazilian taxpayers
of all political leanings are indirectly financing the PT, by far the most
organized and dedicated of Brazil's numerous political parties.
As the planting season
for soybeans is growing near, farmers would like to know if they might legally
plant genetically modified seeds. Congress has yet to define policy as this
long awaited material is bogged down in disputes among environmentalists and
those concerned about the health hazards of food products.
Political reform has been
put on the back burner indefinitely as is the matter of central bank autonomy,
something that was promised to the IMF and creditors.
Also stalled in a congress
more concerned about October's municipal elections are the bankruptcy law,
judiciary reform, tax reform and the project to create PPP or Partnerships
between Public and Private sectors, which the government says will result
in infrastructure projects, sewage, ports and highways for which the government
by itself lacks funds.
In spite of the lackadaisical
habits of Brazil's legislators and the inefficiency of the judicial system,
it is up to these two branches of government to protect the society against
the encroachment of the federal executive branch.
The states, many of which
are governed by non-PT persons who make sense, are loosing tax revenues to
Opposition to the PT is
fragmented, but best represented by the PSDB and PFL that formed part of the
coalition that helped Fernando Henrique Cardoso govern.
The other big party, PMDB
with little ideological conviction, swings back and forth according to what
it perceives will create more favors for its members.
Unless the moderate Left
and conservative elements unite soon, Brazil may be in for many years of rule
by the PT and its collaborators.
José Dirceu, Lula's
right hand man, spent his vacation in Cuba and was there for the 26 de Julio
Lula himself favors democracy,
but his government is riddled with those who would impose an authoritarian
state denominated society.
The Finance Minister,
Antonio Palocci, himself a former Trotskyite, is an exception to the others.
Since he is the most visible
minister to foreign economic observers, the façade of a market-oriented
government is thus far maintained, with the help of Henrique Meirelles, president
of the central bank, who has managed to hang on to his job in spite of revelations
of certain improprieties.
His explanations are far
from complete but for the time being at least, his name and that of Banco
do Brasil president Cássio Casseb have disappeared from the headlines.
Richard Edward Hayes first came to Brazil in 1964 as an employee of Chase
Manhattan Bank. Since then, Hayes has worked directly and as an advisor
for a number of Brazilian and international banks and companies. Currently
he is a free lance consultant and can be contacted at email@example.com.
Paulo, August 18, 2004.