Even the most orthodox international lending institutions
have been checkmated by President-elect Luiz Inácio
Silva’s announced policies.
The head of the
International Monetary Fund, Horst Kohler,
called Lula "a
leader for the twenty-first century."
Luiz Inácio Lula da Silva, the incoming President of Brazil, is demonstrating an uncanny ability to move forward a
progressive agenda while keeping his conservative antagonists at bay. This was clearly demonstrated in his meeting with
George W. Bush in Washington on December 10. Pablo Gentili, an Argentine international analyst at the State University of Rio
de Janeiro declares: "Da Silva reaped the support of the Bush administration while making it clear that his government will
set its own agenda and priorities. He has an extraordinary capacity to build broad support for his left-leaning policies in the
face of domestic and international adversity."
Before da Silva’s arrival in Washington key Republican Congressional figures, along with right wing conservatives
identified with the Reagan administration’s bellicose policies in Central America, were calling for Bush to take a tough stand
against the incoming president who is common referred to as "Lula." They decried the new leftist threat in Latin America,
asserting a "Lula, Castro, Chavez axis" was in the making, referring to presidents Fidel Castro of Cuba and Hugo Chavez of Venezuela.
Lula had also been hit by international speculators prior to his visit to Washington. Fearful that the social policies
advocated by the new government will adversely affect Brazil’s ability to make payments of its huge international debt totaling
$240 billion, the investment bank of J P Morgan on December 2 downgraded its rating of Brazil from "neutral" to "negative."
This shift led to a slide in the value of Brazil’s currency, the Real, and a slump in the country’s stock market.
As Francisco Menezes of IBASE, an independent research institute in Rio de Janeiro, notes, "Lula before coming
to Washington positioned himself so that international institutions and politicians like Bush would find it difficult to go
after him." The day after he won the Brazilian election Lula declared that his number one priority when he takes office on
January 1st is to end hunger among 23 million Brazilians, approximately one-seventh of the country’s population. The campaign
will be accompanied by increased subsidies to poor families aimed at keeping their children in school, by a fairly radical
agrarian reform program, and by significant government support for agricultural cooperatives.
"By making the ending of hunger his number one priority, Lula has inoculated himself against many of his
detractors," says Menezes. As an expert on agrarian issues, Menezes has been participating in the planning meetings for the
government’s campaign against hunger. He says the World Bank along with the United Nations Food and Agricultural Organization
have already informally committed their institutions to spending $5 billion over the next four years on the campaign against hunger.
Even the most orthodox international lending institutions have been check mated by da Silva’s announced policies.
Just days before Lula left for Washington, the head of the International Monetary Fund, Horst Kohler, went to Brazil. After
meeting with Lula, Kohler proclaimed that the incoming president "is a leader for the twenty-first century." He even endorsed
Lula’s call for increased social spending and lamented J.P. Morgan’s downgrading of Brazil’s investment rating.
One major area of discussion between the Bush administration and Lula in Washington focused on the Free Trade
Area of the Americas (FTAA). Bush has made this agreement the lynchpin of his Latin American policy, calling for all the
countries of the hemisphere (excepting Cuba) to begin reducing trade barriers in 2005. Lula has repeatedly expressed reservations
about FTAA, asserting that it favors US domination of Latin America.
Lula positioned himself strategically in the FTAA debate by meeting with regional allies before going to
Washington. As Marcos Arruda, a foreign policy consultant to the incoming government notes, "Lula intentionally visited
neighboring countries before visiting Bush to make it clear he would not grovel for US support and that Brazil has its own agenda
and interests in South America." On December 2, Lula visited Argentina, Brazil’s leading partner in Mercosur, the regional
trade block that also includes Uruguay and Paraguay. Next he went to Chile, an associate member of Mercosur. In his major
address in Buenos Aires, Lula called for a strengthening of Mercosur "so we can take control of our destiny" and end "our
dependency on international currency flows." Lula, in Argentina as well as Chile, asserted that Mercosur should take priority over
other trade agreements, and went on to call for a common currency among Mercosur nations and the formation of a regional Parliament.
In Washington Lula was able to seize the commercial high ground by pointing to a series of US protectionist
measures that actually run counter to authentic free trade. Approximately 25 percent of Brazil’s exports valued at over $14 billions
currently go to the United States. Twenty of the leading products face average US tariffs of 39 percent. If the trade barriers were
removed on just four productsorange juice, steel, meat and soy productsit is estimated that annual Brazilian exports to the
US would jump by $2 billion.
Francisco Menezes of IBASE believes it is doubtful that the talks between Lula and Bush will actually lead to any
significant reduction of U.S. trade barriers, particularly on products like orange juice. "Bush’s brother Jeb as governor of
Florida obviously has a stake in keeping out Brazilian juice because of his alliance with local orange growers." Moreover,
Menezes worries that even the apparently favorable rapport between Lula and George W. Bush will soon sour. "With Iraq and the
Middle East the administration has its hands full, it doesn’t want to create a crisis with the Lula government for now. Bush is
biding his time. He will wait for the inevitably deeper reactions of domestic and international interests opposed to Lula’s
progressive social policies before moving against the new government."
Roger Burbach is co-editor, with Ben Clarke, of
September 11 and the U.S. War (City Lights, 2002), and author of
the forthcoming book The Pinochet Affair: Globalizing Human
Rights. He is director of the Center for the Study of the
Americas (CENSA) in Berkeley, CA and can be reached at