Brazzil
Politics
September 2002
A knight in shining armor charged into the middle of the Brazilian presidential campaign August 7, in the form of the International Monetary Fund dispensing the prospect of a US$30 billion loan and other goodies to help the battered economy. It is the third time the IMF has helped Brazil during Fernando Henrique Cardoso's terms of office and came amid a looming crisis of confidence, which had plunged the Real to record lows and virtually cut off international credit lines. Sighs of relief could be heard all over the country, even within the opposition camp.
The government presidential candidate, José Serra (PSDB), welcomed the accord before the ink had dried on the page in the hope that it would boost his flagging campaign. The PT candidate, Lula, waited a day before accepting it as "inevitable" and making a few half-hearted grumbles. This shows the change in his attitude. Could one have imagined the Lula of old showing such moderation? However, as Lula finally stands a good chance of winning the election he has to be more cautious. He also knows that this accord will give his government, should he win in October, a good breathing space in its first year.
In fact, as the Folha de S. Paulo newspaper pointed out on August 9, the PT played an important part in the agreement through contacts the party's president, José Dirceu, had with Fernando Henrique Cardoso. The paper said that, although Dirceu denies it, he was contacted by Cardoso on one of the days when the Real plunged to R$3.50 against the dollar. The PT made it clear that it would only accept the IMF agreement if the annual primary surplus was maintained at 3.75 percent of GDP. This is what happened and, according to the paper, the PT's attitude helped the government's negotiating team.
Anthony Garotinho (PSB), who has been a vociferous critic of banks, criticized the details of the agreement but did not condemn it outright. That was left to the man of the moment, Ciro Gomes (PPS), who lashed out. "Brazil had been forced to its knees three times by international usurers whose interests were well guarded by this government," he said within hours of the announcement being made on Wednesday August 7. The following day, in a speech to Air Force officers in Rio de Janeiro, he described it as a "disaster".
However, it is difficult to believe this is really Gomes' opinion and it sounds like electoral bluster aimed at showing that he is the only candidate who is outrightly hostile, and as another stick to beat the government with. Right from the beginning, the IMF made it clear that no package would be forthcoming without the support of the main candidates and we can be sure that the Gomes camp gave this assurance.
The question now is, will the accord favor any of the candidates? First of all, without being condescending, it should be pointed out that the average voter probably does not understand what the fuss was all about. The Real has been gradually losing its value against the dollar over years, the economy is in the doldrums and the agreement is unlikely to have any immediate positive effect. Perhaps it may lead some companies not to fire people but what Brazil needs is job creation and this accord will not bring any new jobs. It will only make things less worse rather than bring any tangible improvement.
For this reason, some observers think Gomes will benefit by being critical. Few think Serra will benefit as he is the candidate of the government which was responsible for having to ask (or beg) for the loan. A poll published on August 8 showed that Serra had lost a further 3 percent and had only 11 percent, the same as Garotinho, while Lula fell 1 percent to 33 percent and Gomes gained 2 percent to 27 percent. This was the first major poll since the television debate of August 4 we discussed in our last article. It shows Serra is still down and, perhaps, out.
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