Brazil: 9 Months of Lula and No Birth to Celebrate

Brazil: 9 Months of Lula and No Birth to Celebrate

Brazilian President Lula thinks that words are a substitute for
actions. He just said that
homeless people could be accommodated
in empty buildings. This is the kind of simplistic idea, much like

the Zero Hunger project, that sounds good but will not work in
practice. You need a strong economy
to create jobs.

John Fitzpatrick


We have just marked the first nine months of the administration of President Luiz Inácio Lula da Silva and, while it
is still too early to make any meaningful assessment of his administration, things are not going as badly as some
gloom-mongers feared. But they’re certainly not as well as they could be either.

There have been some successes, such as the reform of the state pension system and the crushing of an internal
revolt by radicals within Lula’s Workers Party, the PT. However, these have been outnumbered by setbacks such as the tax
reform law, which is threatening to explode into a full-blown fiscal war as individual states rush to approve tax breaks and
sweeteners before it comes into effect.

Although the tax reform package was recently passed by the Lower House of Congress, it still faces a long hard
ordeal in the Senate, and may not be implemented in its current form. But there have been other high-profile failures, such as
Lula’s anti-hunger crusade—still more of a slogan than an active program, and the inability to reduce chronically high levels
of unemployment.

I would highlight two particular reasons why this nine-month gestation period has not resulted in the birth of a
healthy offspring: the economic situation—domestic and international, and the make-up of Lula’s government.

GDP Growth Forecast Cut

The economy in Brazil is still weak and, despite the frequently optimistic comments of Lula and his top cabinet
ministers, there are no real signs that growth is on the horizon.

Last week the Central Bank reduced its expectations for GDP growth in 2003 from 1.5 to 0.6 percent, and also
foresaw inflation of 8.9 percent for the year. While the inflation figure is within the official target range, this combination of
high inflation and pitiful growth does not augur well. Lula’s government is committed to ending Brazil’s disgraceful social
inequality but, against this economic background, there is no chance of creating a fair society in the near future.

Lula still seems not to have grasped this, and thinks that words are a substitute for actions. We saw an example of
the approach this week, when he said that homeless people could be accommodated in empty buildings in big cities. This is
the kind of simplistic idea, much like the Zero Hunger project, that sounds good but will not work in practice.

One understands that the President is committed to improving the position of the poor, but gestures like this are
palliatives. A strong economy is required to create jobs for the people, and generate the tax revenues the government needs in order
to implement its projects. Brazil is currently nowhere near that position.

The weak world economy is another factor. Although Brazil’s ability to control international events is limited,
the government’s approach to opening international trade has been unhelpful. The wisdom of opening two battlefronts at the
recent talks on world trade in Cancun, and challenging the U.S. and Europe at the same time, is doubtful. Brazil’s decision to
take on a leadership position within the newly created G-22 group of developing nations was also unwise, and could cause a
great loss of face.

There are also signs that the initial warm reaction to a Brazil led by Lula within Latin America is cooling down, as
Lula has failed to deliver regional leadership. At the past week’s preparatory talks on the proposed Free Trade Area of the
Americas, Brazil was virtually isolated among the 34 participating countries in its attempt to limit the coverage of the agreement.
Even two of its Mercosur partners, Uruguay and Paraguay, were against the Brazilian position.

Argentina stood by, but support from this quarter is not worth much since in other areas, it often falters. An example
is Brazil’s long-standing demand for a permanent seat on the U.N. Security Council, to which Argentina has been opposed.

Democracy Comes at a Price   

The second factor—Lula’s sprawling coalition government—is precisely what is not needed in order to cope with
this economic malaise. Support for the Lula administration in Congress already ranges from the Communist Party to the
evangelical Liberal Party, and is about to be widened even further with the arrival of the PMDB (Partido do Movimento
Democrático Brasileiro—Party of the Brazilian Democratic Party). This catch-all group contains some of the most cynical and
unethical politicians in Brazil.

President Fernando Henrique Cardoso faced the same problem in the past. Like Lula, Cardoso was perceived as
honest and decent, but he had to sit down and deal with people who included fraudsters and criminals, grown fat by robbing the
public purse. That is the price to pay for democracy.

This leftover from the bad old days, combined with regional rivalries and the lack of coherent national parties,
means that no Brazilian President really has a free hand. He has to negotiate not only with genuine political parties, which
represent the people, but also with people whose vested interests care only for their own good. The President has the power to
issue temporary decrees, as Cardoso frequently did, but this is an unsatisfactory way to run a democracy.

Having said all that, a poll released this week by the National Confederation of Industry and conducted by polling
company IBOPE showed that both the administration and Lula himself enjoy approval levels of around 70 percent. This is a
fall from six months ago, but is still an astonishing achievement. However, as I have said before in this space, the Brazilian
people are patient, tolerant and realistic and never expected any miracles when they elected Lula. We will have to wait another
year to get a real sense of the government’s popularity, until next year’s municipal elections take place.

Even now, the PT fears the worse and will try to separate the performance of the federal government from the local
issues, so the nationwide municipal poll doesn’t become a popularity test for Lula.


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— which
specializes in editorial and translation services for Brazilian and foreign clients. You can reach him at 

© John Fitzpatrick 2003

This article appeared originally in
Infobrazil, at

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