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Brazzil - Politics - January 2004

Brazil: A Tale of Two Lulas

Brazil's financial team has been reeling. And last week, President
Lula took his team to Geneva to enlist the world's industrial giants
to open shop in Brazil. But the domestic economy is stagnant. Lula
has vaunted the creation of one million jobs in 2003, but failed
to mention the loss of 500,000 over the same period.

Norman Madarasz


A leak from a Cabinet meeting on Wednesday, January 21, set the tone. President Lula was reported to "have had it with academics". The next day, he fired his Education Minister, Cristovam Buarque, and unfurled his long-declared Cabinet shuffle. Then Lula was on his way to India, pursuing his goal of reinforcing the block of developing nations that so effectively put a halt to US and European ambitions at the WTO Cancun summit.

A star on the international stage, the President has left the people at home perplexed.

While Brazil's image of leadership abroad keeps growing, what is left—in both senses of the term—of the initial PT in government is now widely in doubt. The year has been a splendid one for the President as far as readjusting the country's finances and reputation with international investors. But at home, despite its President's continued charismatic appeal, Brazil can hardly be said to be a better place than it was two years ago.

Unemployment levels in the greater São Paulo region have pierced the historical record of 20 percent. But that figure is calculated upon the roughly 40 percent of the work force considered to be part of the "formal" economy. The streets of downtown Rio de Janeiro, for example, are clogged with street vendors, typical `employees' of the informal or parallel economy. They sell anything from CDs to pens, but the origin of their products is quite unknown. As is the share that goes to corruption.

Meanwhile, in the upper spheres, Lula's cabinet has been ditched of four of the Party's long-time militants. The congressional alliance formed by the PT with the PMDB (Partido do Movimento Democrático Brasileiro—Party of the Brazilian Democratic Movement) after winning the presidential elections is now set for pay back. Two ministerial positions have been awarded to the PMDB. While the chairmanship of Brazil's huge State-owned power company, Eletrobrás, is also rumored to heading into allied hands.

The PMDB is a center coalition with various leanings. One of Brazil's oldest parties, it has been mired in corruption scandals and allegations. What it is not is a party that has been akin to the egalitarian, social justice and trade-union based ideas behind Lula's rise to power. Throughout 2003, the President defended the need to address the sorry state of the country's economy. From steaming as the ninth largest GDP only four years ago, Brazil now bows with fragility as the 13th.

The government has posted surpluses on several economic indicators. The fiscal budget surplus for 2003—in accordance with IMF dictates—has reached its target of 4.25 percent of GDP, rising even higher than it was forced to under the previous government. Although the country signed a deal with the IMF to bolster its federal reserves, it still had to disburse a whopping $30 billion for debt servicing. This represents 9.49 percent of GDP, or roughly 40 percent of the 2003 federal budget.

This debt management has garnered the government with vast respectability on the international financial stage. In addition, Lula's team has used precious funds acquired from the country's record trade surplus to further fill its reserves. International investment banks have torn Brazil's rating down from the pre-election hysteria and stamp it with top marks—for a casino capital market, that is. The international climate has also provided the government with a rational argument about why society's needs cannot be addressed immediately.

So, the government's financial team has been reeling. And last week, Lula took his team to Geneva to enlist the world's industrial giants to open shop in Brazil.

But the domestic economy is stagnant. Lula has vaunted the successful creation of one million jobs in 2003. In the same stroke, he conveniently failed to mention the loss of 500,000 jobs over the same period. The first year of government was filled with long term promises. Now these have shifted to the short term; though the only difference in their loftiness is their intensity. What Brazilians are now being promised with is a 3 percent growth projection—hardly the numbers first projected by its economic advisors in the lead-up to the election.

It is true that the inflation rate, which had been headed into double-digit figures, has now been tamed. However, the trade-off has been a stiff prime interest rate that was set at 23.5 percent after Lula's investiture, and slowly eased down to 16.5 percent since then—but no lower than during the previous government's eight years in power.

José Dirceu, Lula's Chief of Staff, who holds every bit the role of a prime minister, was caught by television cameras speaking to a closed session meeting of PT rank and file last year. With such interest rates, he avowed, the country could hardly be expected to grow. And yet, the rates remain beyond the access of mere mortals.

During the ill-fated Fernando Collor de Mello government in 1990, Lula created a shadow cabinet. Among the PT militants then active, none have survived the shuffle. Rising in protest against the compromises struck by Lula with the PMDB in order to get his social security reform passed, four long-standing PT members ended up being expelled from the party last December—despite international calls for moderation.

Lula's henchman at Social Security, Ricardo Berzoini, has been moved to labor, the purpose has not yet been elucidated. After forging compromises on the pension reform, and insulting the nation's elderly by forcing them to register in overcrowded and understaffed downtown centers to prove they were real persons and/or still alive, Berzoini is set to move on toward dealing with mounting trade union anger.

What can be concluded after a year in government? As opposed to 1990, the Cabinet is but a shadow of the PT.

Meanwhile, Lula's economic alliances abroad spread. His accomplishments in this area, and his deep commitment to keeping Brazil free from an asymmetrical inclusion into the Free Trade Agreements of the Americas, have been widely successful. It has been harder, though, to tame domestic capitalists, and the elite who continue to thrive from the country's state-granted privileges. Indeed, Lula has just added to it by creating some 4000 new public servant positions after slashing benefits for the mid- to low income range functionaries.

With such internal stagnancy, his flagship program, Hunger Zero, is now looking every bit the case of hand-outs that government critics from the right claimed it was.

But with the backtracking on pension reform, lackluster job creation, and, most dramatically, the utter lack of funds destined to education and health, the PT's success in Brasilia looks like a case of politics over substance. With every frustrated criticism addressed toward the party's "left-wing", we move closer and closer to Blair and Jospinism. Or, in other words, a moment when disappointment begins sliding into deception.

Tarso Genro, the new education minister, former mayor of Porto Alegre, and father of expelled member Luciana, has argued eloquently for restraint and patience. Brash economic maneuvers taken too soon could send the country spiraling internationally (faced with creditors and speculators) and internally (faced with Brazil's own intransigent elite). Yet if the Cabinet is trying to smooth talk its way through reforms, only to have to back track later and compromise on all articles, what is it worth to keep massive reforms on the burner and keep playing the nice guy?

Genro's position at education is perhaps the most important in a long-term perspective. In short, if the country is "backward", it's simply due to a vastly under-funded education system. France, where education is among the best in the world, is currently at pains in its long term GDP forecast due to the fact that its universities are not innovative enough. Innovation comes in clever spurts in Brazil, but small ones they remain. In the meantime, not only do Brazil's best students flock to foreign universities: many of them marry and remain abroad.

Job creation is made possible by minds who strive for innovation. It is boosted by an education in the humanities on the nature of contemporary society and citizenship. Sadly, this nation instead dips its mind into multiple religions. And its President, instead of educating the public on material innovation and creation, merely reinforces these spiritualist leanings by appealing to God or by confessing his deep faith.

Too much talk, indeed, too much idealism is locking the President into spiritual utopianism. The entire population, however, awaits his government's leadership as a constitutive power. No wonder the President's fed up with academics and intellectuals.

Norman Madarasz, philosopher and journalist, teaches and lives in Rio de Janeiro. He welcomes comments at nmphdiol2@yahoo.ca

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