Brazzil
Politics
September 2002

"President" Lula's Choices

Pressing Problems Faces His Excellency
“President” Lula – Who Will Run the Central Bank

John Fitzpatrick

Only a few days before election day on October 6 and the question is: can the PT's Luiz Inácio Lula da Silva win in the first round? The answer is a “yes”. Opinion polls give him around 45 percent, putting him within reach of the 50 percent majority required for a knock-out. Even if he fails to win in the first round, the chances of him winning in the second round are extremely good and polls show he would win by a wide margin over his rivals ex-health minister, José Serra (PSDB), former governor of Rio de Janeiro, Anthony Garotinho (PSB) and former finance minister, Ciro Gomes (PPS).

Lula is on a winning streak and his principal rival, Serra, is making little headway even though he recently overtook Ciro Gomes in second place. It is difficult to see any single factor arising between now and polling day which will upset this scenario. Serra's tactics of trying to blame Lula for the worsening economic situation have failed, and his claim that he will create eight million jobs has fallen on deaf ears.

Voters have also shown that they will not be intimidated by scare tactics and will not vote for Serra, simply because the market sees him as a safer pair of hands. This week saw the dollar soar to record levels against the real, reaching R$3.80 at one point, but Lula is no longer seen as the bogeyman responsible for the sinking currency. Finance minister, Pedro Malan, told investors in Washington that greed, fear and ignorance were driving the market. He also said that a PT government would maintain the basic economic policies of the Fernando Henrique Cardoso administration.

In fact, the PT has been quietly preparing itself to assume responsibility for the economy since it knows that Lula's untried team will need as much domestic and international support it can get, if he wins. However, there is still a lot of uncertainty about whether Lula will maintain Cardoso's economic policies. The fact that Lula has such a commanding lead shows that voters are not so keen on these policies and want change. How much change will be up to “President” Lula to decide.

Let us look at one dilemma which arose this week when Lula announced, on the very day the real nosedived, that the current Central Bank President, Arminio Fraga, would lose his job under a PT administration. (Serra later announced that Fraga would remain under his government.) Few voters will be swayed by the fate of a financier whom most have never even heard of so this was not a vote-winning announcement by Lula. Everyone agrees that Fraga has done an excellent job over the last three years but no-one could possibly expect Lula to keep him on.

However, at the same time, some PT economic advisers would like him to stay on temporarily and, in fact, Lula may find that Fraga will remain in charge for some time. Any new Central Bank chief will need to be approved by Congress which does not meet until February 15, about six weeks after the new President takes office. If Lula wins outright on October 6 the market will expect a quick indication of who will be the next Central Bank president. If this does not happen, then things could get even worse. At the same time, Lula will have to put forward a serious candidate acceptable to domestic and foreign investors and international institutions like the IMF and World Bank.

There are signs that this is happening. Brazilian journalist Celso Pinto, writing in the Folha de S. Paulo newspaper, quoted a top PT adviser as saying that the next Central Bank president would not need to be from the PT. Pinto said that over the last two weeks, the PT's economic policy makers had held meetings with Brazil's main bankers, such as Olavo Setúbal of Itaú, Lázaro Brandão of Bradesco, José Safra of Safra and Fábio Barbosa of Banco Real, as well as economists with divergent views such as Delfim Netto, Luiz Paulo Rosenberg, Ibrahim Eris and Raul Velloso.

Pinto said possible candidates for the post whose names were raised included Claudio Haddad, an ex-Central Bank director, and Henrique Meirelles, former president of BankBoston. Both these bankers have great credibility but one could only imagine them accepting the post if they were given the kind of freedom Cardoso has given Fraga. At the same time, it is difficult to imagine Lula being comfortable with either of these two, particularly Haddad who used to be a partner in Banco Garantia, a pushy US-style investment bank, which overstepped itself a few years ago and was subsequently sold to the Swiss bank Credit Suisse. Meirelles has expressed political ambitions and may be more to Lula's taste. However, this is pure speculation at the moment and Lula is playing his cards close to his chest.

Much will also depend on who Lula's finance minister would be. In theory, the finance minister is senior to the Central Bank president, and Malan, has exercised this power. However, he and Fraga have been a team of de facto equals and the market will not be happy to have a Central Bank chief hemmed in by a finance minister who is a politician. Even today, after almost eight years of loyal service to the President, Malan is still not a member of Cardoso's PSDB or any other party. One of those tipped to be Lula's finance minister is João Sayad, a former minister under José Sarney's government, and currently in charge of the finances of São Paulo's PT-run city government.

Lula is looking extremely pleased with himself and has every right to do so. Everyone loves a winner and even those interest, which will vote against him, are now more or less reconciled to the idea for a PT president. He was even called “Your Excellency” at a meeting of the Brazilian lawyers' association as though he were already President. His “peace and love” campaign, in which the rhetoric was toned down and a statesmanlike approach adopted, seems to have paid off.

© John Fitzpatrick 2002

Down for the Count

Ciro Gomes has still not made a sincere apology for his
asinine remark that the main role of his girlfriend was
to sleep with him. To many this showed the face of  a macho man
who thinks women only exist for his pleasure.

John Fitzpatrick

Like Icarus, the son of Dedalus, Brazil's would-be president, Ciro Gomes, has flown as high as he could and, having reached his zenith, is crashing earthwards, his waxy wings on fire. His fall has come as quickly as his rise and, for the sake of Brazilian democracy, let us hope there is no Phoenix-like resurrection in the years to come. Gomes has shown himself to be vain, petulant, undemocratically-minded, and unfit to be a presidential candidate, never mind president.

Here are the results of the latest polls in mid September, which show that Lula is still well in the lead, with Serra gaining support, Gomes falling and Garotinho gaining some support.

  Datafolha Ibope Vox Populi
Lula (PT) 40% 39% 39%
Serra (PSDB) 21% 19% 19%
Gomes (PPS) 15% 15% 17%
Garotinho (PSB) 14% 12% 12%

Source: Folha de São Paulo (September 13)

No one likes to be a loser but Gomes is being an extremely poor loser. He claims that the opinion polls, which are charting his downfall, are fabricated by “billions of reais circulating behind the scenes to try and influence votes”. We do not know who is paying out these “billions of reais” because he did not identify anyone. Presumably he means that rival candidates are either bribing respondents or the polling companies are being paid massive amounts to engage in a conspiracy.

Like all the other candidates he has made various appeals to the electoral court, but has been openly critical of it because some of its rulings have gone against him. He has accused it of being favorable to Serra, showing a lack of faith in and respect for an important institution in the democratic process. He also suggested that the elections would not be free and fair and said he was considering whether to ask the United Nations to send international observers. One recalls that ex-president Jose Sarney made a similar preposterous statement earlier this year after his daughter, Roseana Sarney, abandoned her presidential bid, following a police raid on a company she owned which unearthed over one million reais in cash sitting in an office safe.

Even Gomes' attempts to admit that he may not be as perfect as he imagines he is have backfired. Last week he said that although he was sometimes hot-headed, what was more important was that he was not a thief. (This is a good example of the Alice in Wonderland mentality prevalent in Brazilian politics. Look at the current campaign by Paulo Maluf to become governor of São Paulo state. Maluf, who has faced countless accusations of corruption in his political career, is fighting his campaign on an anti-crime ticket.) If not being a thief is a good credential for being president then presumably 99 percent of the population could hold the highest office in the land.

Also, Gomes has still not made a sincere apology for his asinine remark that the main role of his girlfriend, the actress Patricia Pillar, was to sleep with him. To many Brazilian women this comment showed the face of the Northeastern macho man who thinks women only exist for his pleasure. Gomes' own advisers have admitted that the remark had had a devastating effect on women voters and needed to be addressed. Here, however, is a free translation of Gomes' idea of an “apology”: “It was a joke and, if it was in bad taste, I am sorry, but it was a joke taken out of context (by Serra).”

Hopefully, having bid Gomes farewell we can look ahead to either a first round knockout by Lula or a second round between Lula and Serra.

The question now is will Lula continue to coast along or could Serra pull off a surprising victory? In purely numerical terms, voters who sided with Gomes and Garotinho in the first round are more likely to vote for Lula than for Serra. However, what will happen after October 6 if we have a Lula-Serra stand-off? We can be sure of one thing, Lula's honeymoon will be over. The media, which has savaged Gomes, will turn its attention to Lula and the PT.

We can expect articles about the PT's administration in places like Santo André, where there have been corruption allegations, and in São Paulo where the PT mayor, Marta Suplicy, has performed poorly. The PT governor of Rio de Janeiro state, Benedita da Silva, will come under fire for the latest prison rebellion which saw rival factions kill their enemies almost at will and negotiate with the police on equal terms. The militant activities of the MST landless peasant movement will be singled out once more and doubts will be raised as to whether Lula really has changed. Inside that neat little suit is there still a tee-shirted union orator?

There are already signs that business is stepping up contributions to Serra. A director at a leading bank told me last week that there are a surprisingly large number of people in the financial community who now think Serra will pull it off. It is hard to imagine this but one cannot rule it out. However, if it does happen then let us hope it is based on political rather than personal factors and that last-minute “scandals” or “revelations” play no part of it.

Lula Now

Everything seems to point to Lula as Brazil's next president.
His reformation is such that it seems almost impossible
to find anyone who does not like him and,
in turn, he seems to love everybody.

John Fitzpatrick

On October 6, chances are that the veteran left-wing PT leader, Luiz Inácio Lula da Silva, will top the presidential poll and probably go into a second round that he will win. This is not meant to be a prediction, but a conclusion one can state fairly confidently because it is confirmed by consistent backing in the opinion polls.

While the ratings of the other three main candidates—former Health Minister José Serra (PSDB), former Ceará state Governor Ciro Gomes (PPS) and former Rio de Janeiro state Governor Anthony Garotinho (PSB)—have fluctuated in the last few months, Lula's have remained steady. The latest IBOPE poll, published on September 3, shows him with 35 percent while Serra and Gomes each have 17 percent, and Garotinho 11 percent. Lula has fallen from earlier heights of around 40 percent, but his ratings have consistently put him well ahead of the others.

This was a scenario few observers would have foreseen a year ago. At that time, Lula was seen to be a voice in the wilderness, shouting old slogans and offering out-of-date ideas. The change has been enormous and in almost a blink we have seen the "old" Lula banished from the public eye, to be replaced by a moderate, almost fatherly figure ready to take on the task of leading the nation. His publicists have done a great job in smartening him up, swapping the tee shirts stretched over a paunch for smart suits and capped teeth, and making him use more inclusive language.

The reformation is such that it seems almost impossible to find anyone who does not like him and, in turn, he seems to love everybody. Not only has he formed the strangest political alliances, but he even appeared to be praising the military dictatorship recently for creating an economic boom that boosted employment.

How has this come about, and why is Brazil now fairly relaxed about "President" Lula? One reason is that Lula has been the dominant opposition figure for over 20 years, first as a trade union leader who challenged the military, and then as the founder of the PT. Several generations have grown up with Lula, who is as familiar a face as that of relatives. Therefore, to many people Lula represents not change but continuity.

Another reason is that, at the present time, right-wing policies have no appeal to the electorate. All the main candidates are center-left, and the two fringe candidates are extreme left. Parties that sit more to the political right have formed alliances with other candidates, as is the case with most of the PFL, now supporting Gomes. In these circumstances, Lula is not only on home ground: he also got a head start.

A further reason is that President Fernando Henrique Cardoso, who cannot seek another term, did not cultivate a natural successor and let the PSDB front runners, Serra and current Ceará state Governor Tasso Jeriassati, slug it out for the candidacy. The aggrieved Jeriassati has repaid Cardoso by announcing his support for Gomes, his predecessor as Ceará Governor and a long-time regional ally. Cardoso has not taken an active part in the race, and has even said privately he will back Lula if Serra does not reach the second round. This shows an astonishing lack of confidence—if not disdain—for his own party's candidate.

However, one of the main reasons why Lula is now seen as a good boy is the current world economic crisis. Over the last year the Brazilian economy has been severely hit—unemployment has risen, the value of the real against the dollar has plunged, the current account deficit remains stubbornly high, and only the promise of a US$30 billion loan from the International Monetary Fund has staved off what could have been a collapse, not only in Brazil but in all the emerging markets.

All the main candidates have gone along with the IMF deal, as they know there was no other way out. The bulk of this loan will become available next year, so the new president knows he will have a cushion between him and reality for a while. Those sectors that have traditionally been against the PT—the banks, big business, etc.—also know this and, consequently, have become more relaxed.

This is not to say that everything will be OK next year. The real, in particular, could easily come under pressure, and the Central Bank may find it does not have enough reserves available to intervene in the market on an organized basis, as it has done this year. The country itself seems to have recognized the gravity of the latest crisis and accepted the situation, despite the usual knee-jerk anti-Americanism and hostility to the IMF and the World Bank in some quarters. It is the third time the IMF has come to Brazil's rescue over the last eight years and, perhaps, voters have also become used to it.

At the same time, the IMF has improved its public relations and shown a less harsh face. By offering the loan, which featured a bigger dollar figure than expected, the IMF has shown that it recognizes Brazil's strategic importance. It also acted discreetly, and sounded out the views of the candidates before announcing the deal.

This crisis has helped Lula enormously. By accepting the IMF agreement, he has shown that actions speak louder than words and hushed those voices constantly demanding an unambiguous public statement that he would honor Brazil's debt commitments. The bitter struggle between Serra and Gomes has also benefited him. While attention has focused on this unseemly scrap, Lula has remained above the fray, appearing statesmanlike in comparison with the feuding Serra and Gomes.

Meanwhile, the PT leadership has done an excellent job of muzzling internal dissent, as the party realizes it is on the brink of success. The unions are quiet, and even the landless peasant movement, the MST, has scaled down its activities. Although the MST and PT are not formally linked, there are shared sympathies and it is difficult to believe that the MST's current low profile is a coincidence. Lula's policy of forming a broad front has also helped, so he is not coming under attack from interests which would normally be hostile to the PT.

However, Lula as president is an unknown quantity and Brazilians could be taking a big risk putting their trust in him. Lula has admitted that he has little political administrative experience, and recently compared himself with Nelson Mandela, who assumed the South African presidency after a lengthy jail term and with no prior experience. A better comparison might be with the Polish trade union leader, Lech Walessa, who was a wonderful symbol of freedom and a dynamic union leader but an unimpressive president. Unlike Mandela who, at least, gave South Africa a sense of unity, Walessa left a poor legacy and lost virtually all the popular support he had enjoyed.

So far, Lula has had an easy ride, and it is time he was called to account. PFL party President, Senator Jorge Bornhausen, made an interesting point recently when he called attention to the support Lula has received from former President and current Minas Gerais state Governor Itamar Franco. It was Franco's rash behavior in early 1999, soon after he was elected governor and blatantly defaulted on state debt, that contributed strongly to the sharp devaluation of the real that followed.

Bornhausen also recalled Lula saying he would cancel a contract signed by Petrobras for oil platforms to be constructed in Singapore, to have them built in Brazil instead. The PFL Senator looked back to when the PT won the governorship in Rio Grande do Sul state: one of the first acts of the new governor was to renege on a contract which the previous government had signed with Ford to build a new auto plant in the state. Ford refused to renegotiate the terms, and eventually set up the plant in the state of Bahia. Lula has criticized the Petrobras platform contract in practically every speech he has made, as though having this platform built in Brazil will solve the problem of unemployment.

The PT is also strongly critical of the American attempt to set up a Free Trade Area of the Americas, and is backing a national plebiscite against Brazilian involvement. Lula is pinning his faith on the moribund Mercosul, which links Brazil with bankrupt Argentina, tiny crisis-ridden Uruguay, and Paraguay, one of the most corrupt, inefficient countries in the world.

Let us hope that in the second round—whether it is against Serra or Gomes—Lula is forced to shed his public relations mask, and tell us what he really stands for.

Serra's Respite

Ciro Gomes' declining popularity shows that Serra's
attacks on his character have hit home.
Serra has accused Gomes of lying about
his political record and personal life.

John Fitzpatrick

The government-backed candidate in Brazil's presidential election, former Health Minister José Serra (PSDB), must have produced a huge sigh of relief at the end of August when an opinion poll showed the tide may finally have turned in his bid for the presidency. The survey by IBOPE showed that Serra's rating jumped from 11 to 17 percent and, even better, those of his rival, Ciro Gomes (PPS), had fallen from 26 to 21 percent.

The main opposition candidate now in his fourth attempt to win the presidency, Luiz Inácio Lula da Silva (PT), is still far ahead and maintained his rating of 35 percent. The fourth candidate, former Rio de Janeiro Governor Anthony Garotinho (PSB) gained one percentage point and rose to 11 percent. Two other polls, by Vox Populi and Sensus, showed broadly similar figures: Lula (34 and 34 percent), Gomes (25 and 25.5 percent, Serra (15 and 14.7 percent) and Garotinho (8 and 10.4 percent) respectively.

The IBOPE results mean that in just over a week, Gomes lost a 15 lead over Serra, and both are now technically even. It is far too early to say that Gomes' star has waned but this is the first real breakthrough for the Serra camp since the campaign became entered its decisive stages, with daily free television airtime being used. Instead of coasting along as the front runner with Lula, Serra has been reeling since Gomes unexpectedly arose in the voters' consciousness and pushed him aside. Serra himself was obviously pleased with the result, but described it as only the "first goal" in the game.

Gomes made no immediate comment, but went on the defensive during his allotted TV airtime on the day the poll was published, accusing Serra of making false attacks on him. This time it was the Gomes camp that started reeling, and it is expected to counterattack by blaming Serra for all the problems of the Cardoso era, including high unemployment and financial crises. We can also expect mudslinging and personal attacks.

Gomes' declining popularity shows that Serra's attacks on his character have hit home. Serra has basically accused Gomes of being a liar in terms of his political record and personal life. He has attacked Gomes over his handling of the economy when he was briefly Finance Minister in 1994, and was still a member of the PSDB. Serra has also accused Gomes of lying about being educated in public schools, when in fact part of his school days were spent at private schools. Serra's television strategy also embarrassed Gomes by showing a video in which he suggested that a radio listener in a phone-in program was a "moron", over a remark the listener made about Switzerland. To make matters worse, it was Gomes who appeared the moron as it was he who eventually made a factual error about the Swiss system of government.

But Gomes produced an even more amazing gaffe this week, when asked by a journalist whether his girlfriend, well-known actress Patricia Pillar, played an important role at his side during the campaign. Gomes replied: "My companion has one of the most important roles, which is to sleep with me. I would say that is a fundamental role."

Observers believe the Serra camp has made good use of the first few days of free television airtime, to bring Gomes back within reach. This is probably true, but Gomes himself must shoulder some of the blame. When his rating first surged, he was not well known among the general public and appeared young, fresh and new. However, over the last month his face has become familiar, and it looks as though familiarity is beginning to lead to contempt.

We have expressed our concerns about Gomes' failings several times and will not repeat them here, but in our view, he is dangerous, and along with the populist Garotinho, the worst candidate. It looks as though the public is beginning to see the hollow reality behind the image. The public has a short memory, and just as it took him to its breast in an instant, so it may discard him with equal speed. One should remember Maranhão state Governor Roseana Sarney, the public's darling less than a year ago according to opinion polls, who is now out of the running…

It's also hard to resist comparing Gomes with Brazilian national football team Manager, Luiz Felipe Scolari, who became an overnight hero when the team won the World Cup earlier this year in Korea and Japan. Two months after the big win, Scolari's popularity is already fading, partly because he announced his resignation from the squad, which promptly lost its first game following the World Cup triumph—and last match under Scolari's leadership—at home to Paraguay.

Scolari had previously praised Gomes and announced his intention of voting for him. It was no coincidence that the match was held in Fortaleza, where Gomes was once mayor. In a nauseating attempt to link Gomes with the world champions, the candidate was pictured holding a Brazilian shirt bearing number 23, a reference to his electoral code number. One hates to see Brazil lose a game but, in this case, it was good to see Gomes, at least, humiliated. Did voters, however, see any symbolism in his being associated with a losing team?

The news of Serra's improved ratings is good for the PT because it gives Lula time to sit back, bask in his newfound respectability, and watch Serra and Gomes fight it out. As for Lula himself, he is weaving the most tangled of tangled webs to become president. We have already pointed out the strange alliance he represents, which includes the Brazilian Communist Party and the evangelically-oriented PL (Liberal Party), along with other strange bedfellows most people outside Brazil will not have heard of. His running mate is the millionaire owner of a textile firm.

On the day the IBOPE poll was published, Lula was photographed shaking hands with former President Jose Sarney of the PMDB, an old-style political boss from the Northeast who represents everything the PT supposedly despises. Sarney and Lula are, of course, still miles apart in ideology. But by backing Lula, Sarney is getting back at Serra, whom he blames for a police raid on a company owned by daughter Roseana. The raid uncovered huge sums of cash, and led to an ongoing criminal investigation. "The enemy of my enemy is my friend", sums up this unlikely love match.

Lula is now in a position that would have been hard to imagine not that long ago. He has the support of not just one, but two former presidents, since Itamar Franco, the Governor of Minas Gerais states, has decided to back him. Lula might even end up with support from the incumbent, President Fernando Henrique Cardoso, if Serra flops in the first round and we have a Lula-Gomes runoff.

The PT candidate is aware of the irony of his position. "Now I have the support of two former presidents, Sarney and Itamar Franco. I just don't want the support of Fernando Collor" he said recently, in a reference to the former president who stepped down 10 years ago as he was about to be impeached following allegations of corruption.

Finally, in passing, I would like to mention the astonishing lack of security at a public rally I attended last week, which featured an address by Lula. The rally was held outside São Paulo's downtown Municipal Theatre, in the middle of a hot afternoon. Lula and the PT leadership were addressing supporters from atop a rather rickety platform. The PT claimed 10,000 were there, while the police put the figure at 3,000. To me, both figures were inflated.

However, what concerned me was the lack of visible security. There were a few police cars on the periphery, but no uniformed police near the platform. I was about 15 feet away from Lula, with only a few people between me and the candidate, and I could easily have gotten closer. Although I was carrying a bag on my shoulder, no one questioned me.

The entire potential future leadership of the country could have been wiped out in a few seconds, if anyone had that intention in mind. One assumes that Lula has his own personal bodyguards, but I have seen much tighter security outside a bingo hall than surrounding the leading presidential candidate. When I later commented on this, Brazilians pooh-poohed any idea that Lula could be in physical danger. "The people like him, no one would hurt him", one person said, recalling that he had seen Lula speak during the military regime, unafraid of army helicopters hovering overhead.

Let's hope the Brazilians are right, but some tightening of security is definitely required. The last thing Brazil needs at this point is an assassination attempt on the leading candidate.

John Fitzpatrick is a Scottish journalist who first visited Brazil in 1987 and has lived in São Paulo since 1995. He writes on politics and finance and runs his own company, Celtic Comunicações - www.celt.com.br, which specializes in editorial and translation services for Brazilian and foreign clients. You can reach him at jf@celt.com.br

© John Fitzpatrick 2002

These articles were originally published at E-zine Infobrazil, which can be read at www.infobrazil.com


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